Investors in CES Energy Solutions Corp. (TSE:CEU) had a good week, as its shares rose 4.9% to close at CA$1.92 following the release of its third-quarter results. It looks like the results were a bit of a negative overall. While revenues of CA$316m were in line with analyst predictions, earnings were less than expected, missing estimates by 6.7% to hit CA$0.03 per share. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.
Taking into account the latest results, CES Energy Solutions's twelve analysts currently expect revenues in 2020 to be CA$1.30b, approximately in line with the last 12 months. Earnings per share are expected to leap 30% to CA$0.17. Before this earnings report, analysts had been forecasting revenues of CA$1.31b and earnings per share (EPS) of CA$0.17 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at CA$3.78. 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 CES Energy Solutions, with the most bullish analyst valuing it at CA$5.00 and the most bearish at CA$2.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Further, we can compare these estimates to past performance, and see how CES Energy Solutions forecasts compare to the wider market's forecast performance. We would highlight that sales are expected to reverse, with the forecast 0.6% revenue decline a notable change from historical growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 0.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect CES Energy Solutions to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that CES Energy Solutions's revenues are expected to perform worse than the wider market. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for CES Energy Solutions going out to 2021, and you can see them free on our platform here..
It might also be worth considering whether CES Energy Solutions's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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