Revenue Beat: Capital Power Corporation Beat Analyst Estimates By 84%

It's been a good week for Capital Power Corporation (TSE:CPX) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.1% to CA$36.05. Revenue of CA$1.1b beat expectations by an impressive 84%, while statutory earnings per share (EPS) were CA$6.04, in line with estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Capital Power

Taking into account the latest results, the eight analysts covering Capital Power provided consensus estimates of CA$2.94b revenue in 2024, which would reflect a sizeable 25% decline over the past 12 months. Statutory earnings per share are forecast to drop 20% to CA$3.89 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CA$2.14b and earnings per share (EPS) of CA$2.93 in 2024. There has definitely been an improvement in perception after these results, with the analysts noticeably increasing both their earnings and revenue estimates.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of CA$41.55, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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 Capital Power, with the most bullish analyst valuing it at CA$48.00 and the most bearish at CA$36.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that revenue is expected to reverse, with a forecast 32% annualised decline to the end of 2024. That is a notable change from historical growth of 23% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.4% per year. It's pretty clear that Capital Power's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Capital Power following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Capital Power going out to 2026, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 5 warning signs for Capital Power you should be aware of, and 2 of them make us uncomfortable.

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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.