Celebrations may be in order for Dorian LPG Ltd. (NYSE:LPG) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on DorianG too, with the stock up 21% to US$22.12 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
After the upgrade, the five analysts covering DorianG are now predicting revenues of US$310m in 2024. If met, this would reflect a credible 3.8% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to dip 9.0% to US$2.19 in the same period. Previously, the analysts had been modelling revenues of US$279m and earnings per share (EPS) of US$1.71 in 2024. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
Despite these upgrades, the analysts have not made any major changes to their price target of US$21.53, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. Currently, the most bullish analyst values DorianG at US$25.00 per share, while the most bearish prices it at US$17.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the DorianG's past performance and to peers in the same industry. It's pretty clear that there is an expectation that DorianG's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.0% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 5.8% annually. So it's clear that despite the slowdown in growth, DorianG is still expected to grow meaningfully faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to next year's earnings expectations, it might be time to take another look at DorianG.
Analysts are clearly in love with DorianG at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as the risk of cutting its dividend. For more information, you can click through to our platform to learn more about this and the 1 other concern we've identified .
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.
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