The latest analyst coverage could presage a bad day for Energiekontor AG (ETR:EKT), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the downgrade, the most recent consensus for Energiekontor from its four analysts is for revenues of €222m in 2022 which, if met, would be a substantial 32% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing €253m of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on Energiekontor, given the substantial drop in revenue estimates.
There was no particular change to the consensus price target of €126, with Energiekontor's latest outlook seemingly not enough to result in a change of 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 Energiekontor, with the most bullish analyst valuing it at €136 and the most bearish at €116 per share. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that Energiekontor is forecast to grow faster in the future than it has in the past, with revenues expected to display 32% annualised growth until the end of 2022. If achieved, this would be a much better result than the 1.5% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 8.8% per year. So it looks like Energiekontor is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Energiekontor this year. They're also forecasting more rapid revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Energiekontor after today.
Of course, there's always more to the story. We have estimates for Energiekontor from its four analysts out until 2024, 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.
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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.