The Consensus EPS Estimates For SNGN Romgaz SA (BVB:SNG) Just Fell Dramatically

The latest analyst coverage could presage a bad day for SNGN Romgaz SA (BVB:SNG), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the most recent consensus for SNGN Romgaz from its four analysts is for revenues of RON12b in 2022 which, if met, would be a meaningful 12% increase on its sales over the past 12 months. Per-share earnings are expected to grow 17% to RON8.77. Previously, the analysts had been modelling revenues of RON14b and earnings per share (EPS) of RON10.44 in 2022. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a considerable drop in earnings per share numbers as well.

View our latest analysis for SNGN Romgaz

What's most unexpected is that the consensus price target rose 13% to RON55.86, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic SNGN Romgaz analyst has a price target of RON65.60 per share, while the most pessimistic values it at RON46.90. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that SNGN Romgaz's rate of growth is expected to accelerate meaningfully, with the forecast 25% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 10% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 7.7% annually. It seems obvious that as part of the brighter growth outlook, SNGN Romgaz is expected to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for SNGN Romgaz. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple SNGN Romgaz analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.