The Ring Energy, Inc. (NYSEMKT:REI) Analysts Have Been Trimming Their Sales Forecasts

The analysts covering Ring Energy, Inc. (NYSEMKT:REI) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the four analysts covering Ring Energy are now predicting revenues of US$128m in 2021. If met, this would reflect a meaningful 18% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$142m of revenue in 2021. It looks like forecasts have become a fair bit less optimistic on Ring Energy, given the substantial drop in revenue estimates.

Check out our latest analysis for Ring Energy

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Ring Energy's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Ring Energy's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 18% growth on an annualised basis. This is compared to a historical growth rate of 34% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.1% annually. So it's pretty clear that, while Ring Energy's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Ring Energy this year. They're also forecasting more rapid revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Ring Energy after today.

Of course, this isn't the full story. We have estimates for Ring Energy from its four analysts out until 2022, 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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