News Flash: Analysts Just Made A Stunning Upgrade To Their Eneva S.A. (BVMF:ENEV3) Forecasts

Eneva S.A. (BVMF:ENEV3) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The stock price has risen 7.3% to R$16.54 over the past week, suggesting investors are becoming more optimistic. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

After the upgrade, the four analysts covering Eneva are now predicting revenues of R$5.1b in 2021. If met, this would reflect a sizeable 56% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 25% to R$1.02. Prior to this update, the analysts had been forecasting revenues of R$3.9b and earnings per share (EPS) of R$0.64 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for Eneva

With these upgrades, we're not surprised to see that the analysts have lifted their price target 5.5% to R$15.51 per share. 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. Currently, the most bullish analyst values Eneva at R$17.00 per share, while the most bearish prices it at R$14.04. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Eneva's growth to accelerate, with the forecast 81% annualised growth to the end of 2021 ranking favourably alongside historical growth of 12% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 0.3% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Eneva is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Eneva could be worth investigating further.

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. For more information, you can click through to our platform to learn more about our valuation approach.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. 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.
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