The analysts might have been a bit too bullish on Edison International (NYSE:EIX), given that the company fell short of expectations when it released its second-quarter results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$3.0b, statutory earnings missed forecasts by an incredible 27%, coming in at just US$0.85 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Edison International's eleven analysts are now forecasting revenues of US$13.2b in 2020. This would be an okay 5.7% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 40% to US$4.32. Before this earnings report, the analysts had been forecasting revenues of US$13.2b and earnings per share (EPS) of US$4.22 in 2020. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$67.82, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Edison International, with the most bullish analyst valuing it at US$86.00 and the most bearish at US$58.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Edison International shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Edison International's past performance and to peers in the same industry. It's clear from the latest estimates that Edison International's rate of growth is expected to accelerate meaningfully, with the forecast 5.7% revenue growth noticeably faster than its historical growth of 1.4%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Edison International is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Edison International following these results. 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. 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Edison International going out to 2024, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 3 warning signs for Edison International (of which 1 is a bit concerning!) you should know about.
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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