Earnings Update: Anaergia Inc. (TSE:ANRG) Just Reported And Analysts Are Trimming Their Forecasts

The analysts might have been a bit too bullish on Anaergia Inc. (TSE:ANRG), given that the company fell short of expectations when it released its first-quarter results last week. Earnings missed the mark badly, with revenues of CA$37m falling 35% short of expectations. Losses correspondingly increased, with a CA$0.14 per-share statutory loss some 12% larger than what the analysts expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Anaergia after the latest results.

Check out our latest analysis for Anaergia

After the latest results, the eight analysts covering Anaergia are now predicting revenues of CA$188.8m in 2023. If met, this would reflect a solid 15% improvement in sales compared to the last 12 months. Losses are supposed to decline, shrinking 17% from last year to CA$0.64. Before this latest report, the consensus had been expecting revenues of CA$265.8m and CA$0.47 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The average price target lifted 16% to CA$5.48, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Anaergia at CA$8.00 per share, while the most bearish prices it at CA$2.10. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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 period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 21% growth on an annualised basis. That is in line with its 22% annual growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 8.7% annually. So although Anaergia is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Anaergia. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Anaergia. Long-term earnings power is much more important than next year's profits. We have forecasts for Anaergia going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Anaergia (1 is concerning!) that you should be aware of.

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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.