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Earnings Beat: Public Service Enterprise Group Incorporated Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

·4 min read

Last week, you might have seen that Public Service Enterprise Group Incorporated (NYSE:PEG) released its full-year result to the market. The early response was not positive, with shares down 3.5% to US$55.09 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at US$9.6b, statutory earnings beat expectations 9.3%, with Public Service Enterprise Group reporting profits of US$3.76 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Public Service Enterprise Group

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

Taking into account the latest results, the consensus forecast from Public Service Enterprise Group's nine analysts is for revenues of US$10.5b in 2021, which would reflect a decent 9.1% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to reduce 8.5% to US$3.46 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$10.6b and earnings per share (EPS) of US$3.46 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.

The analysts reconfirmed their price target of US$63.06, showing that the business is executing well and in line with expectations. 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. Currently, the most bullish analyst values Public Service Enterprise Group at US$72.00 per share, while the most bearish prices it at US$53.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Public Service Enterprise Group's past performance and to peers in the same industry. The analysts are definitely expecting Public Service Enterprise Group's growth to accelerate, with the forecast 9.1% growth ranking favourably alongside historical growth of 0.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.3% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Public Service Enterprise Group is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$63.06, with the latest estimates not enough to have an impact on their price targets.

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

You still need to take note of risks, for example - Public Service Enterprise Group has 1 warning sign we think 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 (at) simplywallst.com.