It's been a sad week for Ormat Technologies, Inc. (NYSE:ORA), who've watched their investment drop 16% to US$72.60 in the week since the company reported its full-year result. Revenues were in line with forecasts, at US$746m, although statutory earnings per share came in 13% below what analysts expected, at US$1.72 per share. 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 analysts have changed their mind on Ormat Technologies after the latest results.
Taking into account the latest results, the most recent consensus for Ormat Technologies from six analysts is for revenues of US$789.6m in 2020, which is a satisfactory 5.8% increase on its sales over the past 12 months. Statutory earnings per share are expected to bounce 24% to US$2.14. In the lead-up to this report, analysts had been modelling revenues of US$789.6m and earnings per share (EPS) of US$2.14 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$73.83, suggesting that the company has met expectations in its recent result. 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. The most optimistic Ormat Technologies analyst has a price target of US$91.00 per share, while the most pessimistic values it at US$49.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. Next year brings more of the same, according to analysts, with revenue forecast to grow 5.8%, in line with its 6.0% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 3.4% per year. So although Ormat Technologies is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Ormat Technologies's revenues are expected to grow faster than the wider market. The consensus price target held steady at US$73.83, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Ormat Technologies. Long-term earnings power is much more important than next year's profits. We have forecasts for Ormat Technologies going out to 2021, and you can see them free on our platform here.
You can also view our analysis of Ormat Technologies's balance sheet, and whether we think Ormat Technologies is carrying too much debt, for free on our platform here.
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