Bearish: Analysts Just Cut Their Orbital Energy Group, Inc. (NASDAQ:OEG) Revenue and EPS estimates

By
Simply Wall St
Published
August 17, 2021
NasdaqCM:OEG
Source: Shutterstock

Today is shaping up negative for Orbital Energy Group, Inc. (NASDAQ:OEG) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the most recent consensus for Orbital Energy Group from its three analysts is for revenues of US$83m in 2021 which, if met, would be a major 97% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 41% to US$0.72. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$100m and losses of US$0.47 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

View our latest analysis for Orbital Energy Group

earnings-and-revenue-growth
NasdaqCM:OEG Earnings and Revenue Growth August 18th 2021

There was no major change to the consensus price target of US$9.33, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Orbital Energy Group analyst has a price target of US$12.00 per share, while the most pessimistic values it at US$7.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing stands out from these estimates, which is that Orbital Energy Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 289% annualised growth until the end of 2021. If achieved, this would be a much better result than the 30% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 7.2% annually. So it looks like Orbital Energy Group is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Orbital Energy Group. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Orbital Energy Group.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Orbital Energy Group's business, like major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 2 other concerns we've identified.

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.

If you decide to trade Orbital Energy Group, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.