Earnings Miss: DNO ASA Missed EPS By 27% And Analysts Are Revising Their Forecasts

Investors in DNO ASA (OB:DNO) had a good week, as its shares rose 5.1% to close at kr24.44 following the release of its third-quarter results. Results were mixed, with revenues of US$1.0b exceeding expectations, even as statutory earnings per share (EPS) fell badly short. Earnings were US$0.09 per share, -27% short of analyst expectations. 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. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, DNO’s three analysts currently expect revenues in 2027 to be US$2.90b, approximately in line with the last 12 months. Statutory earnings per share are predicted to jump 149% to US$0.40. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.89b and earnings per share (EPS) of US$0.46 in 2027. So there’s definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

See our latest analysis for DNO

The consensus price target held steady at kr23.42, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values DNO at kr25.82 per share, while the most bearish prices it at kr21.84. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn’t rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. We would highlight that DNO’s revenue growth is expected to slow, with the forecast 0.2% annualised growth rate until the end of 2027 being well below the historical 14% p.a. growth over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 8.7% per year. Factoring in the forecast slowdown in growth, it’s pretty clear that DNO is still expected to grow faster than the wider industry.

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. On the plus side, they made no changes to their revenue estimates – and they expect it to perform better than the wider industry. The consensus price target held steady at kr23.42, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have forecasts for DNO going out to 2028, and you can see them free on our platform here.

However, before you get too enthused, we’ve discovered 1 warning sign for DNO that you should be aware of.

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