Industry Analysts Just Upgraded Their Advantage Energy Ltd. (TSE:AAV) Revenue Forecasts By 19%

Advantage Energy Ltd. (TSE:AAV) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Advantage Energy will make substantially more sales than they'd previously expected. The stock price has risen 4.3% to CA$10.61 over the past week, suggesting investors are becoming more optimistic. Could this big upgrade push the stock even higher?

After this upgrade, Advantage Energy's four analysts are now forecasting revenues of CA$699m in 2024. This would be a huge 38% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 25% to CA$0.73. Before this latest update, the analysts had been forecasting revenues of CA$589m and earnings per share (EPS) of CA$0.68 in 2024. The forecasts seem more optimistic now, with a nice increase in revenue and a small lift in earnings per share estimates.

Check out our latest analysis for Advantage Energy

Despite these upgrades, the analysts have not made any major changes to their price target of CA$13.95, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth.

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. It's clear from the latest estimates that Advantage Energy's rate of growth is expected to accelerate meaningfully, with the forecast 53% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 25% 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 5.6% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Advantage Energy to grow faster than the wider 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster 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 Advantage Energy.

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

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 with high insider ownership.

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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.

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