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Avista Corporation Just Missed EPS By 44%: Here's What Analysts Think Will Happen Next

Simply Wall St
·4 min read

It's shaping up to be a tough period for Avista Corporation (NYSE:AVA), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$273m, statutory earnings missed forecasts by an incredible 44%, coming in at just US$0.07 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Avista after the latest results.

Check out our latest analysis for Avista

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Taking into account the latest results, the current consensus from Avista's three analysts is for revenues of US$1.46b in 2021, which would reflect a solid 12% increase on its sales over the past 12 months. Per-share earnings are expected to grow 14% to US$2.06. In the lead-up to this report, the analysts had been modelling revenues of US$1.46b and earnings per share (EPS) of US$2.07 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$37.75. 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. Currently, the most bullish analyst values Avista at US$52.00 per share, while the most bearish prices it at US$28.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. One thing stands out from these estimates, which is that Avista is forecast to grow faster in the future than it has in the past, with revenues expected to grow 12%. If achieved, this would be a much better result than the 2.4% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 2.2% per year. Not only are Avista's revenues expected to improve, it seems that the analysts are also expecting it to grow faster 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Avista. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Avista analysts - going out to 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 5 warning signs for Avista (1 can't be ignored) you should be aware of.

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@simplywallst.com.