It's been a good week for Eversource Energy (NYSE:ES) shareholders, because the company has just released its latest annual results, and the shares gained 2.5% to US$95.96. Revenues of US$8.5b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$2.81, missing estimates by 7.0%. 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.
Taking into account the latest results, the most recent consensus for Eversource Energy from ten analysts is for revenues of US$9.21b in 2020, which is a meaningful 8.0% increase on its sales over the past 12 months. Statutory earnings per share are expected to leap 29% to US$3.65. Yet prior to the latest earnings, analysts had been forecasting revenues of US$9.02b and earnings per share (EPS) of US$3.65 in 2020. So it looks like there's been no major change in sentiment following the latest results, although analysts have made a slight bump in to revenue forecasts.
Analysts increased their price target 5.4% to US$91.95, perhaps signalling that higher revenues are a strong leading indicator for Eversource Energy'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 Eversource Energy, with the most bullish analyst valuing it at US$107 and the most bearish at US$63.00 per share. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. Analysts are definitely expecting Eversource Energy's growth to accelerate, with the forecast 8.0% growth ranking favourably alongside historical growth of 2.0% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 3.1% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Eversource Energy 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, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Eversource Energy. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Eversource Energy going out to 2024, and you can see them free on our platform here..
You can also see whether Eversource Energy is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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