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Earnings Miss: Northwest Natural Holding Company Missed EPS By 6.9% And Analysts Are Revising Their Forecasts

Northwest Natural Holding Company (NYSE:NWN) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Northwest Natural Holding beat revenue expectations by 8.0%, recording sales of US$350m. Statutory earnings per share (EPS) came in at US$1.80, some 6.9% short of analyst estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Northwest Natural Holding

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Following last week's earnings report, Northwest Natural Holding's six analysts are forecasting 2022 revenues to be US$870.5m, approximately in line with the last 12 months. Per-share earnings are expected to climb 10% to US$2.53. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$870.3m and earnings per share (EPS) of US$2.53 in 2022. 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 US$54.71. 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. There are some variant perceptions on Northwest Natural Holding, with the most bullish analyst valuing it at US$63.00 and the most bearish at US$49.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Northwest Natural Holding is an easy business to forecast or the the analysts are all using similar assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Northwest Natural Holding's revenue growth is expected to slow, with the forecast 1.6% annualised growth rate until the end of 2022 being well below the historical 2.9% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that Northwest Natural Holding is also expected to grow slower than other industry participants.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$54.71, with the latest estimates not enough to have an impact on their price targets.

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. We have estimates - from multiple Northwest Natural Holding analysts - going out to 2024, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Northwest Natural Holding (at least 1 which shouldn't be ignored) , and understanding these should be part of your investment process.

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

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.