Stock Analysis

Earnings Miss: Montauk Renewables, Inc. Missed EPS By 14% And Analysts Are Revising Their Forecasts

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Montauk Renewables, Inc. (NASDAQ:MNTK) missed earnings with its latest yearly results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$206m, statutory earnings missed forecasts by 14%, coming in at just US$0.25 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Montauk Renewables after the latest results.

Check out our latest analysis for Montauk Renewables

NasdaqCM:MNTK Earnings and Revenue Growth March 19th 2023

Following the recent earnings report, the consensus from dual analysts covering Montauk Renewables is for revenues of US$177.3m in 2023, implying a considerable 14% decline in sales compared to the last 12 months. Statutory earnings per share are expected to dive 60% to US$0.10 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$234.7m and earnings per share (EPS) of US$0.41 in 2023. It looks like sentiment has declined substantially in the aftermath of these results, with a large cut to revenue estimates and a large cut to earnings per share numbers as well.

The consensus price target fell 22% to US$8.33, with the weaker earnings outlook clearly leading valuation estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Montauk Renewables' 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 14% by the end of 2023. This indicates a significant reduction from annual growth of 29% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Montauk Renewables is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Montauk Renewables. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Montauk Renewables' future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

We also provide an overview of the Montauk Renewables Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

What are the risks and opportunities for Montauk Renewables?

Montauk Renewables, Inc., a renewable energy company, engages in recovery and processing of biogas from landfills and other non-fossil fuel sources.

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  • Trading at 15.2% below our estimate of its fair value

  • Earnings are forecast to grow 33.88% per year

  • Became profitable this year


No risks detected for MNTK from our risks checks.

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