Analysts' Revenue Estimates For Auren Energia S.A. (BVMF:AURE3) Are Surging Higher

Auren Energia S.A. (BVMF:AURE3) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Auren Energia will make substantially more sales than they'd previously expected.

Following the latest upgrade, the eight analysts covering Auren Energia provided consensus estimates of R$3.2b revenue in 2022, which would reflect an uneasy 18% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing R$2.4b of revenue in 2022. It looks like there's been a clear increase in optimism around Auren Energia, given the very substantial lift in revenue forecasts.

See our latest analysis for Auren Energia

We'd point out that there was no major changes to their price target of R$18.71, suggesting the latest estimates were not enough to shift their view on the value of the business. 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. The most optimistic Auren Energia analyst has a price target of R$22.00 per share, while the most pessimistic values it at R$17.00. This is a very narrow spread of estimates, implying either that Auren Energia is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. We would highlight that sales are expected to reverse, with a forecast 32% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 62% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.5% per year. It's pretty clear that Auren Energia's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for Auren Energia this year. They also expect company revenue to perform worse than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Auren Energia.

Better yet, our automated discounted cash flow calculation (DCF) suggests Auren Energia could be moderately undervalued. You can learn more about our valuation methodology on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.