Yahoo Finance Scorpio Bulkers Inc. (NYSE:SALT) Analysts Are Cutting Their Estimates: Here's What You Need To Know
Shareholders in Scorpio Bulkers Inc. (NYSE:SALT) had a terrible week, as shares crashed 21% to US$11.18 in the week since its latest quarterly results. Revenues of US$47m beat expectations by a respectable 3.7%, although statutory losses per share increased. Scorpio Bulkers lost US$3.12, which was 117% more than what the analysts had included in their models. 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 Scorpio Bulkers after the latest results.
Check out our latest analysis for Scorpio Bulkers
Following last week's earnings report, Scorpio Bulkers' six analysts are forecasting 2021 revenues to be US$173.6m, approximately in line with the last 12 months. Statutory losses are forecast to balloon 94% to US$0.99 per share. In the lead-up to this report, the analysts had been modelling revenues of US$204.3m and earnings per share (EPS) of US$0.12 in 2021. There looks to have been a major change in sentiment regarding Scorpio Bulkers' prospects following the latest results, with a real cut to revenues and the analysts now forecasting a loss instead of a profit.
The average price target was broadly unchanged at US$28.71, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the 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. The most optimistic Scorpio Bulkers analyst has a price target of US$50.00 per share, while the most pessimistic values it at US$15.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with the forecast 0.2% revenue decline a notable change from historical growth of 25% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.6% annually for the foreseeable future. It's pretty clear that Scorpio Bulkers' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts are expecting Scorpio Bulkers to become unprofitable next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Scorpio Bulkers analysts - going out to 2022, and you can see them free on our platform here.
Before you take the next step you should know about the 4 warning signs for Scorpio Bulkers (1 shouldn't be ignored!) that we have uncovered.
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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
