Rainbows and Unicorns: Stolt-Nielsen Limited (OB:SNI) Analysts Just Became A Lot More Optimistic

Stolt-Nielsen Limited (OB:SNI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. Stolt-Nielsen has also found favour with investors, with the stock up a worthy 11% to kr158 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the upgrade, the most recent consensus for Stolt-Nielsen from its three analysts is for revenues of US$2.5b in 2022 which, if met, would be a meaningful 13% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 83% to US$2.70. Before this latest update, the analysts had been forecasting revenues of US$2.2b and earnings per share (EPS) of US$2.01 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Stolt-Nielsen

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$19.73, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Stolt-Nielsen at US$205 per share, while the most bearish prices it at US$148. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Stolt-Nielsen's rate of growth is expected to accelerate meaningfully, with the forecast 13% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 0.9% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 15% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Stolt-Nielsen is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue forecasts, although the latest estimates suggest that Stolt-Nielsen will grow in line with the overall market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Stolt-Nielsen.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Stolt-Nielsen going out to 2024, and you can see them free on our platform here..

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.