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Equitrans Midstream Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Last week saw the newest annual earnings release from Equitrans Midstream Corporation (NYSE:ETRN), an important milestone in the company's journey to build a stronger business. Revenues were US$1.4b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.89, an impressive 28% ahead of estimates. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Equitrans Midstream

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

Following the latest results, Equitrans Midstream's seven analysts are now forecasting revenues of US$1.48b in 2024. This would be a reasonable 6.4% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be US$0.91, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$1.53b and earnings per share (EPS) of US$0.89 in 2024. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

There's been no real change to the average price target of US$11.27, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Equitrans Midstream analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$6.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Equitrans Midstream is forecast to grow faster in the future than it has in the past, with revenues expected to display 6.4% annualised growth until the end of 2024. If achieved, this would be a much better result than the 4.1% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 1.3% annually. Not only are Equitrans Midstream's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Equitrans Midstream's earnings potential next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Equitrans Midstream going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Equitrans Midstream (1 is significant!) that you should be aware of.

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.

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