Energiekontor AG (ETR:EKT) Analysts Just Trimmed Their Revenue Forecasts By 16%

Market forces rained on the parade of Energiekontor AG ( ETR:EKT ) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After this downgrade, Energiekontor's three analysts are now forecasting revenues of €200m in 2021. This would be a substantial 37% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 51% to €2.16. Previously, the analysts had been modelling revenues of €237m and earnings per share (EPS) of €2.19 in 2021. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a substantial drop in revenues and some minor tweaks to earnings numbers. However, due to the nature of the business, it should be noted that earnings rather than revenues are more relevant to understand how the business is doing.

See our latest analysis for Energiekontor

Indded, the consensus has reconfirmed its price target of €84.33, showing that the analysts don't expect weaker sales expectationsthis year to have a material impact on Energiekontor's market value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Energiekontor analyst has a price target of €92.00 per share, while the most pessimistic values it at €71.00. This is a very narrow spread of estimates, implying either that Energiekontor 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. For example, we noticed that Energiekontor's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 37% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 19% 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 8.1% annually. So it looks like Energiekontor is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Energiekontor after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Energiekontor going out to 2023, and you can see them free on our platform here.

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 .

When trading Energiekontor or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers . You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.Promoted

This article by Simply Wall St is general in nature. 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.
^* Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.