Yahoo Finance Murphy Oil Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
Murphy Oil Corporation (NYSE:MUR) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat both earnings and revenue forecasts, with revenue of US$842m, some 8.3% above estimates, and statutory earnings per share (EPS) coming in at US$1.22, 31% ahead of expectations. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Murphy Oil
Taking into account the latest results, the current consensus, from the eleven analysts covering Murphy Oil, is for revenues of US$3.36b in 2023, which would reflect a definite 13% reduction in Murphy Oil's sales over the past 12 months. Statutory earnings per share are expected to plummet 39% to US$5.00 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$3.36b and earnings per share (EPS) of US$5.56 in 2023. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.
The consensus price target held steady at US$47.94, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Murphy Oil analyst has a price target of US$68.00 per share, while the most pessimistic values it at US$34.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 17% by the end of 2023. This indicates a significant reduction from annual growth of 13% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 3.7% annually for the foreseeable future. The forecasts do look bearish for Murphy Oil, since they're expecting it to shrink faster than the industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. The consensus also reconfirmed their revenue estimates, suggesting that sales are performing in line with expectations. Plus, our data suggests that Murphy Oil is expected to perform worse than the wider industry. The consensus price target held steady at US$47.94, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Murphy Oil. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Murphy Oil analysts - going out to 2025, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we've spotted with Murphy Oil (including 1 which is concerning) .
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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