Scorpio Tankers Inc. Just Released Its Yearly Results And Analysts Are Updating Their Estimates
Scorpio Tankers Inc. (NYSE:STNG) shares fell 4.2% to US$21.87 in the week since its latest full-year results. Revenues of US$704m arrived in line with expectations, although statutory losses per share were US$0.97, an impressive 48% smaller than what broker models predicted. 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. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
See our latest analysis for Scorpio Tankers
Taking into account the latest results, the current consensus from Scorpio Tankers's ten analysts is for revenues of US$1.02b in 2020, which would reflect a substantial 45% increase on its sales over the past 12 months. Earnings are expected to improve, with Scorpio Tankers forecast to report a statutory profit of US$4.03 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.04b and earnings per share (EPS) of US$4.17 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$41.09, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Scorpio Tankers analyst has a price target of US$55.00 per share, while the most pessimistic values it at US$30.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. It's clear from the latest estimates that Scorpio Tankers's rate of growth is expected to accelerate meaningfully, with forecast 45% revenue growth noticeably faster than its historical growth of 2.6%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 4.4% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Scorpio Tankers to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Scorpio Tankers's revenues are expected to grow faster than the wider market. The consensus price target held steady at US$41.09, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, 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 2021, and you can see them free on our platform here.
You can also see whether Scorpio Tankers is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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