Edison International (NYSE:EIX) just released its latest full-year report and things are not looking great. Edison International missed earnings this time around, with US$12b revenue coming in 5.2% below what analysts had modelled. Statutory earnings per share (EPS) of US$3.78 also fell short of expectations by 18%. Earnings are an important time for investors, as they can track a company's performance, look at what top 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 six analysts are now forecasting revenues of US$13.6b in 2020. This would be a meaningful 10% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to step up 18% to US$4.47. Yet prior to the latest earnings, analysts had been forecasting revenues of US$13.6b and earnings per share (EPS) of US$4.47 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$80.27, suggesting that the company has met expectations in its recent result. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Edison International at US$93.00 per share, while the most bearish prices it at US$70.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
In addition, we can look to Edison International's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's clear from the latest estimates that Edison International's rate of growth is expected to accelerate meaningfully, with forecast 10% revenue growth noticeably faster than its historical growth of 0.4%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. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Edison International to grow faster 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 - and our data does suggest that Edison International's revenues are expected to grow faster 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 in mind, we wouldn't be too quick to come to a conclusion on Edison International. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Edison International analysts - going out to 2022, and you can see them free on our platform here.
You can also view our analysis of Edison International's balance sheet, and whether we think Edison International is carrying too much debt, for free on our platform here.
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