Analysts Have Just Cut Their Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) Revenue Estimates By 13%

The latest analyst coverage could presage a bad day for Solaris Oilfield Infrastructure, Inc. (NYSE:SOI), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, the current consensus, from the four analysts covering Solaris Oilfield Infrastructure, is for revenues of US$325m in 2023, which would reflect a perceptible 6.1% reduction in Solaris Oilfield Infrastructure's sales over the past 12 months. Per-share earnings are expected to rise 2.3% to US$0.82. Prior to this update, the analysts had been forecasting revenues of US$373m and earnings per share (EPS) of US$0.91 in 2023. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a small dip in EPS estimates to boot.

Check out our latest analysis for Solaris Oilfield Infrastructure

It'll come as no surprise then, to learn that the analysts have cut their price target 5.8% to US$12.90. 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. The most optimistic Solaris Oilfield Infrastructure analyst has a price target of US$16.00 per share, while the most pessimistic values it at US$9.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Solaris Oilfield Infrastructure shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Solaris Oilfield Infrastructure's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 8.1% by the end of 2023. This indicates a significant reduction from annual growth of 10% 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 8.7% annually for the foreseeable future. It's pretty clear that Solaris Oilfield Infrastructure's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Solaris Oilfield Infrastructure. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Solaris Oilfield Infrastructure's revenues are expected to grow slower than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Solaris Oilfield Infrastructure after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Solaris Oilfield Infrastructure 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.