evolution oil (EPM) has recently been one of the most searched stocks on Zacks.com. So it's worth looking at some facts that could shape the stock's performance in the short term.
Over the past month, the oil and gas company's stock has increased by +1.4%. This compares to a +3.9% change in the Zacks S&P 500 Composite Index. During this period, the Zacks Oil & Gas – Exploration & Production – United States industry, which Evolution Petroleum belongs to, rose 2.6% in his. The key question here is: What is the future direction of the stock price?
While media reports and rumors about significant changes in a company's business prospects typically trigger stock price trends and lead to immediate price movements, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. Exists.
Regarding revisions to performance forecasts
Zacks prioritizes evaluating changes in a company's future earnings expectations above all else. That's because we believe that the present value of future income streams determines the fair value of a stock.
Our analysis is fundamentally based on how the sell-side analysts covering a given stock are revising their earnings estimates to account for the latest business trends. As a company's earnings expectations rise, so does the fair value of its stock. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, which causes the stock price to rise. For this reason, empirical research has shown that there is a strong correlation between trends in earnings forecast revisions and short-term stock price movements.
Evolution Petroleum is expected to report earnings of $0.04 per share for the current quarter, which would represent a year-over-year change of -90.5%. Over the past 30 days, the Zacks Consensus Estimate has changed -68%.
The consensus earnings estimate for the current fiscal year of $0.21 represents a year-over-year change of -79.2%. This estimate has changed -52.9% over the past 30 days.
Next year's consensus earnings estimate of $0.67 represents a +221.4% change from the earnings that Evolution Petroleum was expected to report a year ago. Over the past month, the estimate has changed -31.6%.
The Zacks Rank, a proprietary stock evaluation tool with an impressive, outside-audited track record of impressive results, harnesses the power of earnings estimate revisions to be a more conclusive indicator of a stock's short-term price performance. . The magnitude of the recent consensus estimate change, along with three other factors related to earnings expectations, has led to Evolution Petroleum's Zacks Rank #4 (Sell).
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Expected revenue growth rate
There's no question that a company's profit growth is the best indicator of its financial health, but nothing will happen if it doesn't make a profit. It's nearly impossible for a company to expand its bottom line without growing it over the long term. Therefore, it's important to know a company's earnings growth potential.
For Evolution Petroleum, Inc., the current quarter's consensus revenue estimate of $21.84 Million represents a year-over-year change of -40.8%. His $88.68 million and his $126.7 million estimates for the current and next fiscal year represent changes of -31% and +42.9%, respectively.
Last reported results and surprising details
Evolution Petroleum reported revenue of $21.02 million in its last reported quarter. This represents a -37.6% year-over-year change. EPS for the same period was $0.03, compared to $0.29 a year ago.
The reported earnings are a surprise of -11.16% when compared to the Zacks Consensus Estimate of $23.67 million. EPS surprise was -70%.
Over the last four quarters, the company has exceeded EPS estimates just once. He's the only time the company has exceeded consensus revenue estimates during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. Whether a stock's current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects is a key determinant of future stock performance.
The present value of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), and the past value of your company Comparing a company to its peers based on these parameters can help you see if it is overvalued, overvalued or undervalued, but how reasonable its stock is You can get a good idea of ​​what
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) categorizes stocks into five groups, ranging from A to F, with A being B B is better than C, and so on), and can help identify whether a stock is overvalued, fairly valued, or temporarily undervalued. Masu.
Evolution Petroleum is rated C on this score, indicating that it trades on par with its peers. Click here to see the values ​​of some of the metrics that determined this grade.
conclusion
The facts discussed here, and much of the other information on Zacks.com, may help you decide whether the market buzz surrounding Evolution Petroleum is worth paying attention to. However, the company's Zacks Rank #4 suggests it may underperform the broader market in the short term.
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Evolution Petroleum Corporation, Inc. (EPM): Free Stock Analysis Report
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