These Analysts Think Vertex Energy, Inc.'s (NASDAQ:VTNR) Earnings Are Under Threat

Today is shaping up negative for Vertex Energy, Inc. (NASDAQ:VTNR) 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 current consensus from Vertex Energy's five analysts is for revenues of US$2.9b in 2022 which - if met - would reflect a major 169% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 100% to US$0.005. Prior to this update, the analysts had been forecasting revenues of US$3.3b and earnings per share (EPS) of US$3.33 in 2022. So we can see that the consensus has become notably more bearish on Vertex Energy's outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

Check out our latest analysis for Vertex Energy

The consensus price target fell 20% to US$17.75, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. There are some variant perceptions on Vertex Energy, with the most bullish analyst valuing it at US$27.00 and the most bearish at US$18.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Vertex Energy shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Vertex Energy's rate of growth is expected to accelerate meaningfully, with the forecast 6x annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 21% 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 5.1% annually. It seems obvious that as part of the brighter growth outlook, Vertex Energy is expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts are expecting Vertex Energy to become unprofitable this year. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Vertex Energy.

There might be good reason for analyst bearishness towards Vertex Energy, like recent substantial insider selling. For more information, you can click here to discover this and the 3 other flags 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.

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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.