Forecast: Analysts Think RWE Aktiengesellschaft's (ETR:RWE) Business Prospects Have Improved Drastically
Shareholders in RWE Aktiengesellschaft (ETR:RWE) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.
After the upgrade, the 16 analysts covering RWE are now predicting revenues of €43b in 2023. If met, this would reflect a decent 17% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 39% to €4.92. Before this latest update, the analysts had been forecasting revenues of €40b and earnings per share (EPS) of €4.43 in 2023. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice increase in earnings per share in particular.
See our latest analysis for RWE
Despite these upgrades, the analysts have not made any major changes to their price target of €53.04, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting RWE's growth to accelerate, with the forecast 37% annualised growth to the end of 2023 ranking favourably alongside historical growth of 28% per annum 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 5.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect RWE to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at RWE.
Analysts are clearly in love with RWE at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as dilutive stock issuance over the past year. You can learn more, and discover the 2 other flags we've identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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.
