ConocoPhillips Company Just Reported Full-Year Earnings: Have Analysts Changed Their Mind On The Stock?

By
Simply Wall St
Published
February 06, 2020
NYSE:COP
Source: Shutterstock

Last week saw the newest annual earnings release from ConocoPhillips Company (NYSE:COP), an important milestone in the company's journey to build a stronger business. Revenues of US$37b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$6.40, missing estimates by 2.1%. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.

Check out our latest analysis for ConocoPhillips

NYSE:COP Past and Future Earnings, February 7th 2020
NYSE:COP Past and Future Earnings, February 7th 2020

Taking into account the latest results, the 14 analysts covering ConocoPhillips provided consensus estimates of US$33.1b revenue in 2020, which would reflect an uncomfortable 9.6% decline on its sales over the past 12 months. Statutory earnings per share are expected to tumble 49% to US$3.27 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$33.2b and earnings per share (EPS) of US$3.56 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$74.75, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic ConocoPhillips analyst has a price target of US$85.00 per share, while the most pessimistic values it at US$65.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.

Further, we can compare these estimates to past performance, and see how ConocoPhillips forecasts compare to the wider market's forecast performance. One obvious concern is that although revenues are forecast to continue shrinking, the expected 9.6% decline next year is substantially more severe than the 2.2% annual decline over the past five years. Compare this with our data on other companies (with analyst coverage) in a similar industry, which in aggregate are forecast to see their revenue decline 4.3% per year. So it looks like ConocoPhillips is also expected to see its revenues decline at a faster rate than the wider market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$74.75, with the latest estimates not enough to have an impact on analysts' estimated valuations.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple ConocoPhillips analysts - going out to 2023, and you can see them free on our platform here.

You can also view our analysis of ConocoPhillips's balance sheet, and whether we think ConocoPhillips is carrying too much debt, for free on our platform here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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