It's been a good week for SFL Corporation Ltd. (NYSE:SFL) shareholders, because the company has just released its latest yearly results, and the shares gained 7.8% to US$12.86. It looks like a credible result overall - although revenues of US$752m were what the analysts expected, SFL surprised by delivering a (statutory) profit of US$0.67 per share, an impressive 22% above what was forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, SFL's four analysts are now forecasting revenues of US$854.7m in 2024. This would be a solid 14% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 65% to US$1.10. Before this earnings report, the analysts had been forecasting revenues of US$825.6m and earnings per share (EPS) of US$0.97 in 2024. So it seems there's been a definite increase in optimism about SFL's future following the latest results, with a substantial gain in the earnings per share forecasts in particular.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 5.2% to US$12.10per share. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values SFL at US$13.00 per share, while the most bearish prices it at US$11.50. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 14% growth on an annualised basis. That is in line with its 12% annual growth 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 revenues grow 1.3% per year. So it's pretty clear that SFL is forecast to grow substantially faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around SFL's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for SFL going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for SFL (2 are a bit concerning!) that you need to take into consideration.
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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.