As you might know, OGE Energy Corp. (NYSE:OGE) last week released its latest full-year, and things did not turn out so great for shareholders. Results look to have been somewhat negative - revenue fell 4.8% short of analyst estimates at US$2.2b, and statutory earnings of US$2.16 per share missed forecasts by 4.9%. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the five analysts covering OGE Energy are now predicting revenues of US$2.34b in 2020. If met, this would reflect an okay 5.0% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to rise 3.7% to US$2.25. Before this earnings report, analysts had been forecasting revenues of US$2.40b and earnings per share (EPS) of US$2.28 in 2020. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
The average price target was steady at US$43.45 even though revenue estimates declined; likely suggesting analysts place a higher value on earnings. 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 OGE Energy analyst has a price target of US$49.00 per share, while the most pessimistic values it at US$38.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that OGE Energy's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 5.0%, well above its historical decline of 0.5% a year over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 3.1% next year. So it looks like OGE Energy is expected to grow faster than its competitors, at least for a while.
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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. Still, earnings per share are more important to value creation for shareholders. 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.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for OGE Energy going out to 2022, and you can see them free on our platform here.
You can also view our analysis of OGE Energy's balance sheet, and whether we think OGE Energy is carrying too much debt, for free on our platform here.
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