3R Petroleum Óleo e Gás S.A. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts - Simply Wall St

3R Petroleum Óleo e Gás S.A. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts - Simply Wall St News

Stock Analysis

- Brazil
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- Oil and Gas
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- BOVESPA:RRRP3

3R Petroleum Óleo e Gás S.A. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts

Last week, you might have seen that 3R Petroleum Óleo e Gás S.A. ( BVMF:RRRP3) released its quarterly result to the market. The early response was not positive, with shares down 9.1% to R$30.21 in the past week. It looks like a pretty bad result, given that revenues fell 13% short of analyst estimates at R$2.0b, and the company reported a statutory loss of R$0.98 per share instead of the profit that the analysts had been forecasting. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for 3R Petroleum Óleo e Gás

After the latest results, the seven analysts covering 3R Petroleum Óleo e Gás are now predicting revenues of R$9.22b in 2024. If met, this would reflect a huge 31% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 1,245% to R$8.78. In the lead-up to this report, the analysts had been modelling revenues of R$8.79b and earnings per share (EPS) of R$7.09 in 2024. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a very substantial lift in earnings per share in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of R$58.12, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 3R Petroleum Óleo e Gás, with the most bullish analyst valuing it at R$86.00 and the most bearish at R$37.20 per share. 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. We would highlight that 3R Petroleum Óleo e Gás' revenue growth is expected to slow, with the forecast 43% annualised growth rate until the end of 2024 being well below the historical 88% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 0.02% per year. So it's pretty clear that, while 3R Petroleum Óleo e Gás' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around 3R Petroleum Óleo e Gás' earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 estimates - from multiple 3R Petroleum Óleo e Gás analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for 3R Petroleum Óleo e Gás you should be aware of, and 2 of them make us uncomfortable.

Valuation is complex, but we're helping make it simple.

Find out whether 3R Petroleum Óleo e Gás is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
View the Free Analysis

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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.

About BOVESPA:RRRP3

3R Petroleum Óleo e Gás

3R Petroleum Óleo e Gás S.A. engages in the exploration and production of oil and natural gas in Brazil.

High growth potential and fair value.