Coterra Energy Inc. (NYSE:CTRA) missed earnings with its latest second-quarter results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$1.3b, statutory earnings missed forecasts by an incredible 22%, coming in at just US$0.30 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

After the latest results, the 15 analysts covering Coterra Energy are now predicting revenues of US$5.70b in 2024. If met, this would reflect a reasonable 2.5% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 5.7% to US$1.87. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.74b and earnings per share (EPS) of US$1.95 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$33.54, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Coterra Energy at US$41.00 per share, while the most bearish prices it at US$29.00. 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 Coterra Energy shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Coterra Energy's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.0% growth on an annualised basis. This is compared to a historical growth rate of 32% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.8% per year. So it's pretty clear that, while Coterra Energy's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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. Happily, there were no major changes to revenue forecasts, with the business still expected 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.

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 Coterra Energy going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Coterra Energy 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.

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