News Flash: 4 Analysts Think RPC, Inc. (NYSE:RES) Earnings Are Under Threat

The analysts covering RPC, Inc. (NYSE:RES) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. 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 latest downgrade, the current consensus, from the four analysts covering RPC, is for revenues of US$1.7b in 2023, which would reflect an uneasy 9.2% reduction in RPC's sales over the past 12 months. Statutory earnings per share are supposed to descend 18% to US$1.11 in the same period. Prior to this update, the analysts had been forecasting revenues of US$1.9b and earnings per share (EPS) of US$1.40 in 2023. Indeed, we can see that the analysts are a lot more bearish about RPC's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for RPC

Despite the cuts to forecast earnings, there was no real change to the US$9.80 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. The most optimistic RPC analyst has a price target of US$13.00 per share, while the most pessimistic values it at US$7.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. One more thing stood out to us about these estimates, and it's the idea that RPC's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 17% to the end of 2023. This tops off a historical decline of 4.0% a year 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 revenue grow 8.9% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect RPC to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that RPC's revenues are expected to grow slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of RPC.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple RPC analysts - going out to 2025, 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 downgrading their estimates. So you may also wish to search this free list of stocks 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.