AGL Energy Limited Recorded A 13% Miss On Revenue: Analysts Are Revisiting Their Models

AGL Energy Limited (ASX:AGL) shareholders are probably feeling a little disappointed, since its shares fell 3.0% to AU$11.05 in the week after its latest half-yearly results. Revenues were AU$5.4b, 13% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of AU$1.58 being in line with what the analysts forecast. Following the result, the 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for AGL Energy

Taking into account the latest results, AGL Energy's twelve analysts currently expect revenues in 2021 to be AU$11.1b, approximately in line with the last 12 months. AGL Energy is also expected to turn profitable, with statutory earnings of AU$0.85 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$11.7b and earnings per share (EPS) of AU$0.87 in 2021. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

It will come as no surprise then, that the consensus price target fell 9.8% to AU$11.62following these changes. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values AGL Energy at AU$17.00 per share, while the most bearish prices it at AU$9.70. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. We would highlight that sales are expected to reverse, with the forecast 1.1% revenue decline a notable change from historical growth of 1.8% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.4% next year. It's pretty clear that AGL Energy's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Yet - earnings are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple AGL Energy analysts - going out to 2024, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for AGL Energy (2 can't be ignored!) that you need to be mindful of.

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