Analysts Have Just Cut Their Genco Shipping & Trading Limited (NYSE:GNK) Revenue Estimates By 11%

Today is shaping up negative for Genco Shipping & Trading Limited (NYSE:GNK) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, the current consensus, from the seven analysts covering Genco Shipping & Trading, is for revenues of US$232m in 2023, which would reflect a sizeable 48% reduction in Genco Shipping & Trading's sales over the past 12 months. Statutory earnings per share are anticipated to tumble 31% to US$1.35 in the same period. Before this latest update, the analysts had been forecasting revenues of US$259m and earnings per share (EPS) of US$1.49 in 2023. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a minor downgrade to EPS estimates to boot.

Check out our latest analysis for Genco Shipping & Trading

Despite the cuts to forecast earnings, there was no real change to the US$23.03 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Genco Shipping & Trading's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 73% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 11% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 4.1% per year. So it's pretty clear that Genco Shipping & Trading's revenues are expected to shrink faster 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 they also cut their revenue estimates for this year, and they expect sales to lag the wider market. That said, earnings per share are more important for creating value for shareholders. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Genco Shipping & Trading after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Genco Shipping & Trading 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.