From Simply Wall Street Taking into account the latest results, the current consensus from MEG Energy's four analysts is for revenues of CA$6.40b in 2022, which would reflect a notable 16% increase on its sales over the past 12 months. Per-share earnings are expected to jump 68% to CA$4.53. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$6.35b and earnings per share (EPS) of CA$4.38 in 2022. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at CA$25.18, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 MEG Energy analyst has a price target of CA$34.00 per share, while the most pessimistic values it at CA$19.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. It's clear from the latest estimates that MEG Energy's rate of growth is expected to accelerate meaningfully, with the forecast 35% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 12% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.6% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect MEG Energy to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around MEG Energy's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at CA$25.18, with the latest estimates not enough to have an impact on their price targets.