Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI) just released its latest annual results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 3.8% to hit US$77m. Hannon Armstrong Sustainable Infrastructure Capital also reported a statutory profit of US$1.24, which was an impressive 66% above what analysts had forecast. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Hannon Armstrong Sustainable Infrastructure Capital after the latest results.
Taking into account the latest results, the current consensus from Hannon Armstrong Sustainable Infrastructure Capital's eight analysts is for revenues of US$95.1m in 2020, which would reflect a substantial 23% increase on its sales over the past 12 months. Statutory earnings per share are forecast to plunge 27% to US$0.94 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$85.0m and earnings per share (EPS) of US$0.92 in 2020. Analyst definitely think the business is capable of improving its revenues, even if they don't foresee any real change in earnings per share.
Analysts increased their price target 8.7% to US$38.00, perhaps signalling that higher revenues are a strong leading indicator for Hannon Armstrong Sustainable Infrastructure Capital's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Hannon Armstrong Sustainable Infrastructure Capital analyst has a price target of US$43.00 per share, while the most pessimistic values it at US$29.00. 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 Hannon Armstrong Sustainable Infrastructure Capital shareholders.
In addition, we can look to Hannon Armstrong Sustainable Infrastructure Capital's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. Next year brings more of the same, according to analysts, with revenue forecast to grow 23%, in line with its 20% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 4.9% per year. So it's pretty clear that Hannon Armstrong Sustainable Infrastructure Capital is forecast to grow substantially faster than its market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Hannon Armstrong Sustainable Infrastructure Capital. 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 Hannon Armstrong Sustainable Infrastructure Capital going out to 2021, and you can see them free on our platform here..
It might also be worth considering whether Hannon Armstrong Sustainable Infrastructure Capital's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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