Things Look Grim For Energiekontor AG (ETR:EKT) After Today's Downgrade

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. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the latest consensus from Energiekontor's four analysts is for revenues of €301m in 2024, which would reflect a huge 24% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to plummet 54% to €2.77 in the same period. Prior to this update, the analysts had been forecasting revenues of €373m and earnings per share (EPS) of €4.04 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for Energiekontor

Analysts made no major changes to their price target of €124, suggesting the downgrades are not expected to have a long-term impact on Energiekontor's valuation.

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. It's clear from the latest estimates that Energiekontor's rate of growth is expected to accelerate meaningfully, with the forecast 24% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 20% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Energiekontor 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Energiekontor.

There might be good reason for analyst bearishness towards Energiekontor, like a weak balance sheet. For more information, you can click here to discover this and the 2 other risks we've identified.

We also provide an overview of the Energiekontor Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, 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.