Sitio Royalties Corp. (NYSE:STR) just released its latest first-quarter results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 6.9% to hit US$164m. Sitio Royalties also reported a statutory profit of US$0.13, which was an impressive 27% above what the analysts had forecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

We've discovered 2 warning signs about Sitio Royalties. View them for free.NYSE:STR Earnings and Revenue Growth May 10th 2025

Taking into account the latest results, the current consensus, from the four analysts covering Sitio Royalties, is for revenues of US$577.3m in 2025. This implies an uneasy 9.3% reduction in Sitio Royalties' revenue over the past 12 months. Statutory earnings per share are expected to dive 70% to US$0.16 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$568.3m and earnings per share (EPS) of US$0.25 in 2025. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

View our latest analysis for Sitio Royalties

It might be a surprise to learn that the consensus price target was broadly unchanged at US$25.20, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Sitio Royalties, with the most bullish analyst valuing it at US$28.00 and the most bearish at US$21.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Sitio Royalties is an easy business to forecast or the the analysts are all using similar assumptions.

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 revenue is expected to reverse, with a forecast 12% annualised decline to the end of 2025. That is a notable change from historical growth of 32% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Sitio Royalties is expected to lag the wider industry.

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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, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Sitio Royalties analysts - going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified  2 warning signs for Sitio Royalties 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.

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