Earnings Miss: Comstock Resources, Inc. Missed EPS And Analysts Are Revising Their Forecasts

There's been a notable change in appetite for Comstock Resources, Inc. (NYSE:CRK) shares in the week since its third-quarter report, with the stock down 14% to US$4.56. Revenues fell badly short of expectations, with sales of US$178m missing analyst predictions by 20%. Statutory earnings correspondingly nosedived, with Comstock Resources reporting a loss of US$0.57 per share, where the analysts were expecting a profit. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Comstock Resources after the latest results.

Check out our latest analysis for Comstock Resources

Taking into account the latest results, the consensus forecast from Comstock Resources' eight analysts is for revenues of US$1.26b in 2021, which would reflect a substantial 50% improvement in sales compared to the last 12 months. Comstock Resources is also expected to turn profitable, with statutory earnings of US$0.73 per share. In the lead-up to this report, the analysts had been modelling revenues of US$1.26b and earnings per share (EPS) of US$0.73 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

With no major changes to earnings forecasts, the consensus price target fell 5.7% to US$8.45, suggesting that the analysts might have previously been hoping for an earnings upgrade. 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. The most optimistic Comstock Resources analyst has a price target of US$11.00 per share, while the most pessimistic values it at US$6.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Comstock Resources' past performance and to peers in the same industry. The analysts are definitely expecting Comstock Resources' growth to accelerate, with the forecast 50% growth ranking favourably alongside historical growth of 41% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Comstock Resources to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Comstock Resources. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Comstock Resources analysts - going out to 2023, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with Comstock Resources .

This article by Simply Wall St is general in nature. 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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