Growth Investors: Industry Analysts Just Upgraded Their Eneva S.A. (BVMF:ENEV3) Revenue Forecasts By 18%

Shareholders in Eneva S.A. (BVMF:ENEV3) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Investor sentiment seems to be improving too, with the share price up 4.1% to R$17.14 over the past 7 days. Could this big upgrade push the stock even higher?

Following the upgrade, the latest consensus from Eneva's dual analysts is for revenues of R$5.3b in 2021, which would reflect a sizeable 63% improvement in sales compared to the last 12 months. Per-share earnings are expected to climb 18% to R$1.03. Prior to this update, the analysts had been forecasting revenues of R$4.5b and earnings per share (EPS) of R$1.02 in 2021. There's clearly been a surge in bullishness around the company's sales pipeline, even if there's no real change in earnings per share forecasts.

Check out our latest analysis for Eneva

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. It's clear from the latest estimates that Eneva's rate of growth is expected to accelerate meaningfully, with the forecast 166% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 12% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 1.1% per year. It seems obvious that as part of the brighter growth outlook, Eneva is expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update 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. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better 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 Eneva.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Eneva that suggests the company could be somewhat 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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