WHAT ARE WE LOOKING FOR?
Canadian energy companies that have had earnings revisions for the next quarter, within in the last couple of months. We'll then check how the revisions have (or have not) affected stock prices.
Using StarMine Professional, we looked at energy stocks on the Toronto Stock Exchange and earnings estimates for those stocks of all market cap sizes in the sector. StarMine is a service that tracks earnings estimate trends.
We looked at price changes in percentage terms and how much analysts in the past 30 and 60 days have increased or decreased profit predictions in percentage terms. We looked at analyst predictions for next quarter's earnings, the next 12 months' earnings. and the next 24 months' earnings.
Wednesday we looked at technology shares because in the past two months analysts had raised their earnings estimates by 1.2 per cent for the next quarter, making it the sector with the highest analyst hopes. Energy analysts are far less bullish, slashing their estimates by 20.5 per cent.
WHAT WE FOUND
First the big picture: In the past two months analysts cut their outlook for the next quarter's earnings by 20.5 per cent. The outlook seems to have improved somewhat recently, with the analysts cutting their outlooks by 4.2 per cent in the last 30 days. Profits in the energy sector have fallen by 67 per cent in the last four quarters, while revenue has plunged 39.5 per cent.
There have been standouts; the 12 analysts who follow Alberta-based natural gas exploration company Iteration Energy, for example, have upped their expectations for the next quarter by 35 per cent in the past two months.