Party Time: Brokers Just Made Major Increases To Their Earthstone Energy, Inc. (NYSE:ESTE) Earnings Forecasts

Earthstone Energy, Inc. (NYSE:ESTE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.

After this upgrade, Earthstone Energy's seven analysts are now forecasting revenues of US$766m in 2022. This would be a substantial 145% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$2.63 per share next year. Before this latest update, the analysts had been forecasting revenues of US$557m and earnings per share (EPS) of US$2.14 in 2022. 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.

See our latest analysis for Earthstone Energy

It will come as no surprise to learn that the analysts have increased their price target for Earthstone Energy 9.3% to US$18.41 on the back of these upgrades. 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. There are some variant perceptions on Earthstone Energy, with the most bullish analyst valuing it at US$22.00 and the most bearish at US$12.00 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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 Earthstone Energy's rate of growth is expected to accelerate meaningfully, with the forecast 105% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 27% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.8% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Earthstone Energy to grow faster than the wider 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 next year. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Earthstone Energy could be worth investigating further.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Earthstone Energy analysts - going out to 2023, 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.

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

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.