Revenue Beat: Eneva S.A. Exceeded Revenue Forecasts By 16% And Analysts Are Updating Their Estimates

Investors in Eneva S.A. (BVMF:ENEV3) had a good week, as its shares rose 7.3% to close at R$16.54 following the release of its quarterly results. Eneva beat revenue forecasts by a solid 16% to hit R$951m. Statutory earnings per share came in at R$0.79, in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Eneva

Taking into account the latest results, the most recent consensus for Eneva from four analysts is for revenues of R$5.09b in 2021 which, if met, would be a sizeable 56% increase on its sales over the past 12 months. Statutory earnings per share are predicted to jump 25% to R$1.02. Before this earnings report, the analysts had been forecasting revenues of R$3.85b and earnings per share (EPS) of R$0.64 in 2021. So we can see there's been a pretty clear increase in sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.

It will come as no surprise to learn that the analysts have increased their price target for Eneva 5.5% to R$15.51on the back of these upgrades. 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 Eneva analyst has a price target of R$17.00 per share, while the most pessimistic values it at R$14.04. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Eneva's past performance and to peers in the same industry. It's clear from the latest estimates that Eneva's rate of growth is expected to accelerate meaningfully, with the forecast 81% 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 a similar industry are forecast to grow their revenue at 1.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Eneva to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Eneva's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Eneva analysts - going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Eneva you should know about.

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