Earnings Update: ProFrac Holding Corp. (NASDAQ:ACDC) Just Reported And Analysts Are Trimming Their Forecasts

It's been a good week for ProFrac Holding Corp. (NASDAQ:ACDC) shareholders, because the company has just released its latest quarterly results, and the shares gained 3.3% to US$10.50. Revenues were US$852m, with ProFrac Holding reporting some 3.5% below analyst expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ProFrac Holding after the latest results.

View our latest analysis for ProFrac Holding

Taking into account the latest results, the consensus forecast from ProFrac Holding's five analysts is for revenues of US$3.43b in 2023, which would reflect a notable 17% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 317% to US$2.46. In the lead-up to this report, the analysts had been modelling revenues of US$3.69b and earnings per share (EPS) of US$4.51 in 2023. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

The consensus price target fell 8.9% to US$25.00, with the weaker earnings outlook clearly leading valuation estimates. 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 ProFrac Holding at US$39.00 per share, while the most bearish prices it at US$12.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on 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. We would highlight that ProFrac Holding's revenue growth is expected to slow, with the forecast 23% annualised growth rate until the end of 2023 being well below the historical 204% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.4% annually. So it's pretty clear that, while ProFrac Holding's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ProFrac Holding. They also downgraded their revenue estimates, although industry data suggests that ProFrac Holding's revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple ProFrac Holding analysts - going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for ProFrac Holding you should know about.

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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.