It's been a mediocre week for Core Laboratories Inc. (NYSE:CLB) shareholders, with the stock dropping 12% to US$14.83 in the week since its latest annual results. Revenues of US$510m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.86, missing estimates by 6.0%. 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 Core Laboratories after the latest results.
Taking into account the latest results, the consensus forecast from Core Laboratories' seven analysts is for revenues of US$528.1m in 2024. This reflects a satisfactory 3.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 26% to US$1.10. In the lead-up to this report, the analysts had been modelling revenues of US$536.3m and earnings per share (EPS) of US$1.20 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
The consensus price target held steady at US$21.44, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Core Laboratories, with the most bullish analyst valuing it at US$28.00 and the most bearish at US$16.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Core Laboratories' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 3.6% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 8.5% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 7.9% per year. So although Core Laboratories' revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Core Laboratories. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Core Laboratories' revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$21.44, with the latest estimates not enough to have an impact on their price targets.
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 forecasts for Core Laboratories going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Core Laboratories , and understanding it should be part of your investment process.
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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.