Need To Know: The Consensus Just Cut Its Sitio Royalties Corp. (NYSE:STR) Estimates For 2023

·2-min read

Market forces rained on the parade of Sitio Royalties Corp. (NYSE:STR) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After this downgrade, Sitio Royalties' four analysts are now forecasting revenues of US$645m in 2023. This would be a sizeable 75% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$743m of revenue in 2023. The consensus view seems to have become more pessimistic on Sitio Royalties, noting the measurable cut to revenue estimates in this update.

See our latest analysis for Sitio Royalties


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 can infer from the latest estimates that forecasts expect a continuation of Sitio Royalties'historical trends, as the 75% annualised revenue growth to the end of 2023 is roughly in line with the 73% annual revenue growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 6.0% annually. So it's clear that not only is revenue growth expected to be maintained, but Sitio Royalties is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also forecasting for revenues to perform better than companies in the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Sitio Royalties after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Sitio Royalties, including the risk of cutting its dividend. For more information, you can click here to discover this and the 1 other flag 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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