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AltaGas Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

·3 min read

AltaGas Ltd. (TSE:ALA) just released its latest second-quarter results and things are looking bullish. Statutory earnings performance was extremely strong, with revenue of CA$2.0b beating expectations by 120% and earnings per share (EPS) of CA$0.09, an impressive 350%ahead of 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.

View our latest analysis for AltaGas


After the latest results, the consensus from AltaGas' twelve analysts is for revenues of CA$7.50b in 2021, which would reflect a perceptible 3.2% decline in sales compared to the last year of performance. Per-share earnings are expected to bounce 34% to CA$1.74. In the lead-up to this report, the analysts had been modelling revenues of CA$6.61b and earnings per share (EPS) of CA$1.73 in 2021. It seems sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

It may not be a surprise to see thatthe analysts have reconfirmed their price target of CA$29.10, implying that the uplift in sales is not expected to greatly contribute to AltaGas's valuation in the near term. 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. There are some variant perceptions on AltaGas, with the most bullish analyst valuing it at CA$32.00 and the most bearish at CA$26.00 per share. This is a very narrow spread of estimates, implying either that AltaGas is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the AltaGas' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 6.3% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 26% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.2% per year. It's pretty clear that AltaGas' revenues are expected to perform substantially worse 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. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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 forecasts for AltaGas going out to 2023, and you can see them free on our platform here.

Plus, you should also learn about the 4 warning signs we've spotted with AltaGas (including 1 which is significant) .

This article by Simply Wall St is general in nature. 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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