Celebrations may be in order for Penn Virginia Corporation (NASDAQ:PVAC) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.
Following the upgrade, the latest consensus from Penn Virginia's twin analysts is for revenues of US$395m in 2021, which would reflect a major 51% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$3.51 in per-share earnings. Previously, the analysts had been modelling revenues of US$336m and earnings per share (EPS) of US$2.04 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 15% to US$18.60 per share. 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 Penn Virginia analyst has a price target of US$25.00 per share, while the most pessimistic values it at US$9.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
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. The analysts are definitely expecting Penn Virginia's growth to accelerate, with the forecast 51% annualised growth to the end of 2021 ranking favourably alongside historical growth of 21% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.9% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Penn Virginia is expected to grow much faster than its 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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Penn Virginia.
Analysts are definitely bullish on Penn Virginia, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including major dilution from new stock issuance in the past year. You can learn more, and discover the 1 other risk we've identified, for 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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Ranger Oil Corporation, an independent oil and gas company, engages in the onshore exploration, development, and production of crude oil, natural gas liquids, and natural gas in the United States.
Good value with reasonable growth potential.