Scorpio Tankers Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a good week for Scorpio Tankers Inc. (NYSE:STNG) shareholders, because the company has just released its latest quarterly results, and the shares gained 4.4% to US$76.68. Revenues were US$373m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$4.34, an impressive 22% 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Scorpio Tankers

Taking into account the latest results, Scorpio Tankers' ten analysts currently expect revenues in 2024 to be US$1.41b, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 6.9% to US$14.18. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.43b and earnings per share (EPS) of US$13.55 in 2024. So the consensus seems to have become somewhat more optimistic on Scorpio Tankers' earnings potential following these results.

There's been no major changes to the consensus price target of US$94.91, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's 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 Scorpio Tankers, with the most bullish analyst valuing it at US$110 and the most bearish at US$82.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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. We would highlight that Scorpio Tankers' revenue growth is expected to slow, with the forecast 1.5% annualised growth rate until the end of 2024 being well below the historical 19% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 2.4% annually. Factoring in the forecast slowdown in growth, it seems obvious that Scorpio Tankers is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Scorpio Tankers' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Scorpio Tankers' revenue is expected to 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Scorpio Tankers going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Scorpio Tankers (1 is concerning!) that you need to be mindful of.

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.

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