Results: Horizon Oil Limited Exceeded Expectations And The Consensus Has Updated Its Estimates

Horizon Oil Limited (ASX:HZN) came out with its annual results last week, and we wanted to see how the business is performing and what industry forecasts think of the company following this report. Results look mixed - while revenue fell marginally short of analyst estimates at US$111m, statutory earnings beat expectations 5.3%, with Horizon Oil reporting profits of US$0.016 per share. This is an important time for investors, as they can track a company's performance in its report, look at what expert is forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.

See our latest analysis for Horizon Oil

Taking into account the latest results, the most recent consensus for Horizon Oil from single analyst is for revenues of US$146.1m in 2025. If met, it would imply a substantial 31% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to bounce 38% to US$0.022. Before this earnings report, the analyst had been forecasting revenues of US$149.4m and earnings per share (EPS) of US$0.021 in 2025. If anything, the analyst looks to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

The consensus has made no major changes to the price target of AU$0.20, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analyst is definitely expecting Horizon Oil's growth to accelerate, with the forecast 31% annualised growth to the end of 2025 ranking favourably alongside historical growth of 9.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.0% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Horizon Oil is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Horizon Oil's earnings potential next year. They also downgraded Horizon Oil's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. The consensus price target held steady at AU$0.20, with the latest estimates not enough to have an impact on their price target.

With that in mind, we wouldn't be too quick to come to a conclusion on Horizon Oil. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2027, which can be seen for free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Horizon Oil 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.