Eversource Energy (NYSE:ES) shareholders are probably feeling a little disappointed, since its shares fell 2.8% to US$77.64 in the week after its latest first-quarter results. Eversource Energy reported in line with analyst predictions, delivering revenues of US$2.4b and statutory earnings per share of US$1.01, suggesting the business is executing well and in line with its plan. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Eversource Energy's six analysts are now forecasting revenues of US$9.08b in 2020. This would be a modest 7.1% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 27% to US$3.65. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$8.89b and earnings per share (EPS) of US$3.64 in 2020. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a modest lift to to revenue forecasts.
Even though revenue forecasts increased, there was no change to the consensus price target of US$87.55, suggesting the analysts are focused on earnings as the driver of value creation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Eversource Energy analyst has a price target of US$100.00 per share, while the most pessimistic values it at US$63.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Eversource Energy shareholders.
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. The analysts are definitely expecting Eversource Energy'sgrowth to accelerate, with the forecast 7.1% growth ranking favourably alongside historical growth of 2.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.1% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Eversource Energy is expected to grow much faster than its industry.
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. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. 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 Eversource Energy going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 4 warning signs for Eversource Energy (1 is a bit concerning!) that you should be aware of.
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