Need To Know: The Consensus Just Cut Its TransAlta Renewables Inc. (TSE:RNW) Estimates For 2023

One thing we could say about the analysts on TransAlta Renewables Inc. (TSE:RNW) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, the current consensus, from the five analysts covering TransAlta Renewables, is for revenues of CA$467m in 2023, which would reflect an uncomfortable 17% reduction in TransAlta Renewables' sales over the past 12 months. Per-share earnings are expected to jump 152% to CA$0.70. Before this latest update, the analysts had been forecasting revenues of CA$532m and earnings per share (EPS) of CA$0.70 in 2023. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a substantial drop in revenues and reconfirming their earnings per share estimates.

See our latest analysis for TransAlta Renewables

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 17% by the end of 2023. This indicates a significant reduction from annual growth of 3.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.7% annually for the foreseeable future. It's pretty clear that TransAlta Renewables' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that TransAlta Renewables' revenues are expected to grow slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on TransAlta Renewables after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with TransAlta Renewables' financials, such as the risk of cutting its dividend. Learn more, and discover the 2 other warning signs we've identified, for free 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.