Analysts Have Made A Financial Statement On Canadian Utilities Limited's (TSE:CU) First-Quarter Report

As you might know, Canadian Utilities Limited (TSE:CU) recently reported its quarterly numbers. Canadian Utilities beat revenue expectations by 2.6%, at CA$1.1b. Statutory earnings per share (EPS) came in at CA$0.82, some 3.5% short of analyst estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Canadian Utilities

Following the latest results, Canadian Utilities' four analysts are now forecasting revenues of CA$4.30b in 2024. This would be a decent 14% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to expand 11% to CA$2.37. Before this earnings report, the analysts had been forecasting revenues of CA$4.09b and earnings per share (EPS) of CA$2.30 in 2024. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of CA$34.33, 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 Canadian Utilities, with the most bullish analyst valuing it at CA$36.00 and the most bearish at CA$33.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business 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 Canadian Utilities' past performance and to peers in the same industry. It's clear from the latest estimates that Canadian Utilities' rate of growth is expected to accelerate meaningfully, with the forecast 20% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 0.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.5% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Canadian Utilities is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Canadian Utilities' earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target held steady at CA$34.33, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Canadian Utilities. Long-term earnings power is much more important than next year's profits. We have forecasts for Canadian Utilities 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 2 warning signs for Canadian Utilities you should be aware of, and 1 of them doesn't sit too well with us.

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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.