Energiekontor AG (ETR:EKT) Analysts Just Slashed This Year's Estimates

Market forces rained on the parade of Energiekontor AG (ETR:EKT) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. Bidders are definitely seeing a different story, with the stock price of €99.00 reflecting a 24% rise in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the downgrade, the current consensus from Energiekontor's three analysts is for revenues of €281m in 2022 which - if met - would reflect a sizeable 77% increase on its sales over the past 12 months. Per-share earnings are expected to rise 4.3% to €2.70. Before this latest update, the analysts had been forecasting revenues of €326m and earnings per share (EPS) of €3.15 in 2022. Indeed, we can see that the analysts are a lot more bearish about Energiekontor's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Energiekontor

What's most unexpected is that the consensus price target rose 13% to €104, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Energiekontor at €115 per share, while the most bearish prices it at €89.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

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. For example, we noticed that Energiekontor's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 77% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 9.6% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.5% annually. Not only are Energiekontor's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Energiekontor.

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 Energiekontor's financials, such as concerns around earnings quality. Learn more, and discover the 1 other concern we've identified, for free on our platform here.

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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.