Analyst Estimates: Here's What Brokers Think Of Magnolia Oil & Gas Corporation (NYSE:MGY) After Its First-Quarter Report

As you might know, Magnolia Oil & Gas Corporation (NYSE:MGY) just kicked off its latest first-quarter results with some very strong numbers. The company beat expectations with revenues of US$319m arriving 4.1% ahead of forecasts. Statutory earnings per share (EPS) were US$0.46, 3.3% ahead of estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Magnolia Oil & Gas

Taking into account the latest results, the consensus forecast from Magnolia Oil & Gas' twelve analysts is for revenues of US$1.35b in 2024. This reflects a decent 9.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 7.9% to US$2.20. In the lead-up to this report, the analysts had been modelling revenues of US$1.33b and earnings per share (EPS) of US$2.09 in 2024. So the consensus seems to have become somewhat more optimistic on Magnolia Oil & Gas' earnings potential following these results.

The consensus price target was unchanged at US$28.15, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Magnolia Oil & Gas, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$22.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 13% growth on an annualised basis. That is in line with its 11% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 2.1% per year. So although Magnolia Oil & Gas is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Magnolia Oil & Gas' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Magnolia Oil & Gas going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Magnolia Oil & Gas that you should be aware of.

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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.