Naturgy Energy Group, S.A. (BME:NTGY) Just Reported And Analysts Have Been Cutting Their Estimates
Investors in Naturgy Energy Group, S.A. (BME:NTGY) had a good week, as its shares rose 6.5% to close at €16.11 following the release of its first-quarter results. It was a negative result overall, with revenues coming in 11% less than what the analysts expected, at €5.1b. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Naturgy Energy Group
After the latest results, the consensus from Naturgy Energy Group's 15 analysts is for revenues of €21.2b in 2020, which would reflect a perceptible 2.6% decline in sales compared to the last year of performance. Statutory earnings per share are expected to tumble 23% to €1.10 in the same period. Before this earnings report, the analysts had been forecasting revenues of €22.8b and earnings per share (EPS) of €1.37 in 2020. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a real cut to earnings per share numbers.
The analysts made no major changes to their price target of €20.24, suggesting the downgrades are not expected to have a long-term impact on Naturgy Energy Group'svaluation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Naturgy Energy Group at €25.20 per share, while the most bearish prices it at €13.50. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. Over the past five years, revenues have declined around 1.9% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 2.6% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 0.6% per year. So while a broad number of companies are forecast to decline, unfortunately Naturgy Energy Group is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Naturgy Energy Group. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at €20.24, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Naturgy Energy Group going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 3 warning signs for Naturgy Energy Group (1 is concerning!) that you should be aware of.
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