Rainbows and Unicorns: Vertex Energy, Inc. (NASDAQ:VTNR) Analysts Just Became A Lot More Optimistic

Vertex Energy, Inc. (NASDAQ:VTNR) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on Vertex Energy too, with the stock up 47% to US$1.99 over the past week. Could this upgrade be enough to drive the stock even higher?

Following the upgrade, the latest consensus from Vertex Energy's three analysts is for revenues of US$221m in 2021, which would reflect a huge 41% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$0.057 in per-share earnings. Before this latest update, the analysts had been forecasting revenues of US$198m and earnings per share (EPS) of US$0.035 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for Vertex Energy

With these upgrades, we're not surprised to see that the analysts have lifted their price target 20% to US$3.00 per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Vertex Energy, with the most bullish analyst valuing it at US$4.00 and the most bearish at US$2.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Vertex Energy's growth to accelerate, with the forecast 58% annualised growth to the end of 2021 ranking favourably alongside historical growth of 7.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.7% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Vertex Energy to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Vertex Energy.

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 Vertex Energy going out to 2025, 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. 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.
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