VAALCO Energy, Inc. (NYSE:EGY) came out with its third-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues of US$147m beat expectations by 9.6%. Unfortunately statutory earnings per share (EPS) fell well short of the mark, turning in a loss of US$0.38 compared to previous analyst expectations of a profit. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from VAALCO Energy's five analysts is for revenues of US$528.5m in 2027. This reflects a major 21% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with VAALCO Energy forecast to report a statutory profit of US$0.66 per share. In the lead-up to this report, the analysts had been modelling revenues of US$511.9m and earnings per share (EPS) of US$0.66 in 2027. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small lift in to revenue forecasts.
View our latest analysis for VAALCO Energy
Even though revenue forecasts increased, the consensus price target 7.4% to US$9.45, perhaps suggesting thatthe analysts have become more pessimistic about the lack of earnings growth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic VAALCO Energy analyst has a price target of US$10.50 per share, while the most pessimistic values it at US$8.40. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that VAALCO Energy's rate of growth is expected to accelerate meaningfully, with the forecast 17% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 10% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 0.5% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that VAALCO Energy is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of VAALCO Energy's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for VAALCO Energy going out to 2028, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for VAALCO Energy (1 makes us a bit uncomfortable!) that you should be aware of.
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