Montauk Renewables Earnings Preview: Will it Beat Expectations?

Wall Street analysts are expecting Montauk Renewables (MNTK) to post a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.

Earnings Expectations

Montauk Renewables is expected to post quarterly earnings of $0.06 per share in its upcoming report, which represents a year-over-year change of +500%. Revenues are expected to be $55.98 million, up 5.1% from the year-ago quarter. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days, reflecting how analysts have reassessed their initial estimates.

Earnings ESP and Zacks Rank

To get a better sense of the likelihood of an earnings beat, we can look at the Zacks Earnings ESP (Expected Surprise Prediction). This model compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate and is based on the latest information from analysts.

For Montauk Renewables, the Most Accurate Estimate is the same as the Zacks Consensus Estimate, suggesting that there are no recent analyst views which differ from what have been considered to derive the consensus estimate. This has resulted in an Earnings ESP of 0%. On the other hand, the stock currently carries a Zacks Rank of #3 (Hold). This combination makes it difficult to conclusively predict that Montauk Renewables will beat the consensus EPS estimate.

Surprise History

Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that Montauk Renewables would post a loss of $0.02 per share when it actually produced earnings of $0.01, delivering a surprise of +150%. Over the last four quarters, the company has beaten consensus EPS estimates just once.

Beyond the Numbers

An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. Montauk Renewables doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Looking Ahead

While the upcoming earnings release will be a key event for Montauk Renewables, investors should keep an eye on the company's long-term growth prospects. The renewable energy sector is expected to continue to grow in the coming years, driven by increasing demand for clean energy and government policies that support renewable energy development. Montauk Renewables is well-positioned to benefit from this growth, with its focus on RNG production.

The company is also expanding its operations, with new projects in development in various states across the U.S. These expansions should drive future revenue and earnings growth. Overall, while Montauk Renewables may not be a compelling earnings-beat candidate in the short term, the company's long-term growth prospects remain strong. Investors should consider the company's long-term potential when making investment decisions.