Analysts Just Slashed Their Safe Bulkers, Inc. (NYSE:SB) EPS Numbers

The latest analyst coverage could presage a bad day for Safe Bulkers, Inc. (NYSE:SB), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the downgrade, the consensus from twin analysts covering Safe Bulkers is for revenues of US$258m in 2023, implying a concerning 24% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to crater 58% to US$0.54 in the same period. Prior to this update, the analysts had been forecasting revenues of US$302m and earnings per share (EPS) of US$1.02 in 2023. Indeed, we can see that the analysts are a lot more bearish about Safe Bulkers' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Safe Bulkers

Analysts made no major changes to their price target of US$4.42, suggesting the downgrades are not expected to have a long-term impact on Safe Bulkers' valuation. 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. There are some variant perceptions on Safe Bulkers, with the most bullish analyst valuing it at US$6.40 and the most bearish at US$2.85 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 42% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 17% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 4.6% per year. The forecasts do look bearish for Safe Bulkers, since they're expecting it to shrink faster than the 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 Safe Bulkers. 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. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Safe Bulkers after the downgrade.

A high debt burden combined with a downgrade of this magnitude always gives us some reason for concern, especially if these forecasts are just the first sign of a business downturn. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.