Growth Investors: Industry Analysts Just Upgraded Their AltaGas Ltd. (TSE:ALA) Revenue Forecasts By 18%

AltaGas Ltd. (TSE:ALA) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that AltaGas will make substantially more sales than they'd previously expected.

Following the upgrade, the most recent consensus for AltaGas from its twelve analysts is for revenues of CA$6.8b in 2021 which, if met, would be a huge 22% increase on its sales over the past 12 months. Statutory earnings per share are forecast to be CA$1.74, approximately in line with the last 12 months. Before this latest update, the analysts had been forecasting revenues of CA$5.8b and earnings per share (EPS) of CA$1.58 in 2021. The forecasts seem more optimistic now, with a decent improvement in revenue and a modest lift to earnings per share estimates.

See our latest analysis for AltaGas

With these upgrades, we're not surprised to see that the analysts have lifted their price target 5.4% to CA$24.67 per share. 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. There are some variant perceptions on AltaGas, with the most bullish analyst valuing it at CA$26.00 and the most bearish at CA$22.00 per share. This is a very narrow spread of estimates, implying either that AltaGas is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. We can infer from the latest estimates that forecasts expect a continuation of AltaGas'historical trends, as the 30% annualised revenue growth to the end of 2021 is roughly in line with the 26% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 2.5% annually. So although AltaGas is expected to maintain its revenue growth rate, it's definitely expected 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. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at AltaGas.

Analysts are clearly in love with AltaGas at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as its declining profit margins. For more information, you can click through to our platform to learn more about this and the 3 other risks we've identified .

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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