Earnings Update: Comstock Resources, Inc. (NYSE:CRK) Just Reported Its Second-Quarter Results And Analysts Are Updating Their Forecasts

Comstock Resources, Inc. (NYSE:CRK) just released its latest quarterly report and things are not looking great. It definitely looks like a negative result overall with revenues falling 15% short of analyst estimates at US$247m. Statutory losses were US$0.43 per share, 153% bigger than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Comstock Resources

Following last week's earnings report, Comstock Resources' eight analysts are forecasting 2024 revenues to be US$1.35b, approximately in line with the last 12 months. Statutory losses are forecast to narrow 4.2% to US$0.071 per share. Before this earnings report, the analysts had been forecasting revenues of US$1.39b and earnings per share (EPS) of US$0.84 in 2024. The analysts have made an abrupt about-face on Comstock Resources, administering a minor downgrade to to revenue forecasts and slashing the earnings outlook from a profit to loss.

The average price target was broadly unchanged at US$10.18, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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 Comstock Resources, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$8.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.7% by the end of 2024. This indicates a significant reduction from annual growth of 24% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 1.9% annually for the foreseeable future. It's pretty clear that Comstock Resources' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Comstock Resources dropped from profits to a loss next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Comstock Resources going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Comstock Resources has 2 warning signs (and 1 which is concerning) we think 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com