Industry Analysts Just Made A Notable Upgrade To Their NRG Energy, Inc. (NYSE:NRG) Revenue Forecasts
Shareholders in NRG Energy, Inc. (NYSE:NRG) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The revenue forecast for next year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.
Following the upgrade, the latest consensus from NRG Energy's five analysts is for revenues of US$12b in 2021, which would reflect a major 27% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to tumble 69% to US$5.19 in the same period. Before this latest update, the analysts had been forecasting revenues of US$11b and earnings per share (EPS) of US$4.93 in 2021. The most recent forecasts are noticeably more optimistic, with a substantial gain in revenue estimates and a lift to earnings per share as well.
View our latest analysis for NRG Energy
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$43.22, suggesting that the forecast performance does not have a long term impact on the company'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. Currently, the most bullish analyst values NRG Energy at US$52.00 per share, while the most bearish prices it at US$34.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the NRG Energy's past performance and to peers in the same industry. One thing stands out from these estimates, which is that NRG Energy is forecast to grow faster in the future than it has in the past, with revenues expected to grow 27%. If achieved, this would be a much better result than the 7.6% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 3.9% next year. Not only are NRG Energy'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 from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at NRG Energy.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 5 potential flags with NRG Energy, including concerns around earnings quality. You can learn more, and discover the 3 other flags we've identified, for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
This article by Simply Wall St is general in nature. 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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