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Analysts' Revenue Estimates For AltaGas Ltd. (TSE:ALA) Are Surging Higher

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·3 min read
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AltaGas Ltd. (TSE:ALA) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that AltaGas will make substantially more sales than they'd previously expected.

Following the upgrade, the most recent consensus for AltaGas from its twelve analysts is for revenues of CA$6.8b in 2021 which, if met, would be a sizeable 22% increase on its sales over the past 12 months. Statutory earnings per share are forecast to be CA$1.74, approximately in line with the last 12 months. Before this latest update, the analysts had been forecasting revenues of CA$5.8b and earnings per share (EPS) of CA$1.58 in 2021. The most recent forecasts are noticeably more optimistic, with a substantial gain in revenue estimates and a lift to earnings per share as well.

Check out our latest analysis for AltaGas

earnings-and-revenue-growth
earnings-and-revenue-growth

It will come as no surprise to learn that the analysts have increased their price target for AltaGas 5.4% to CA$24.67 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values AltaGas at CA$26.00 per share, while the most bearish prices it at CA$22.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 30% growth on an annualised basis. That is in line with its 26% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 2.5% annually. So it's pretty clear that AltaGas is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at AltaGas.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 4 potential warning signs with AltaGas, including its declining profit margins. You can learn more, and discover the 3 other warning signs we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.