Diamondback Energy, Inc. Just Beat Revenue Estimates By 11%
There's been a notable change in appetite for Diamondback Energy, Inc. (NASDAQ:FANG) shares in the week since its third-quarter report, with the stock down 11% to US$183. It was a mildly positive result, with revenues exceeding expectations at US$5.4b, while statutory earnings per share (EPS) of US$5.69 were in line with analyst forecasts. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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, the current consensus from Diamondback Energy's 20 analysts is for revenues of US$19.0b in 2027. This would reflect a credible 6.6% increase on its revenue over the past 12 months. Per-share earnings are expected to shoot up 204% to US$22.16. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$18.8b and earnings per share (EPS) of US$21.76 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
Check out our latest analysis for Diamondback Energy
The analysts reconfirmed their price target of US$239, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Diamondback Energy at US$287 per share, while the most bearish prices it at US$213. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Diamondback Energy's revenue growth is expected to slow, with the forecast 5.2% annualised growth rate until the end of 2027 being well below the historical 19% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 0.7% per year. Even after the forecast slowdown in growth, it seems obvious that Diamondback Energy is also expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$239, with the latest estimates not enough to have an impact on their price targets.
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 Diamondback Energy going out to 2028, and you can see them free on our platform here.
Before you take the next step you should know about the 4 warning signs for Diamondback Energy that we have uncovered.
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