It's been a good week for ProFrac Holding Corp. (NASDAQ:ACDC) shareholders, because the company has just released its latest yearly results, and the shares gained 3.7% to US$8.22. Revenues were US$2.6b, with ProFrac Holding reporting some 3.6% below analyst expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, ProFrac Holding's five analysts currently expect revenues in 2024 to be US$2.66b, approximately in line with the last 12 months. ProFrac Holding 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$2.67b and earnings per share (EPS) of US$1.01 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$11.08, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on ProFrac Holding, with the most bullish analyst valuing it at US$15.00 and the most bearish at US$8.50 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await ProFrac Holding shareholders.
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. It's pretty clear that there is an expectation that ProFrac Holding's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.3% growth on an annualised basis. This is compared to a historical growth rate of 55% over the past three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.7% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than ProFrac Holding.
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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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 forecasts for ProFrac Holding going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for ProFrac Holding that you should be aware of.
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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.
