Stock Analysis

News Flash: Analysts Just Made A Captivating Upgrade To Their E.ON SE (ETR:EOAN) Forecasts

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E.ON SE (ETR:EOAN) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that E.ON will make substantially more sales than they'd previously expected.

Following the latest upgrade, the 17 analysts covering E.ON provided consensus estimates of €96b revenue in 2023, which would reflect a definite 18% decline on its sales over the past 12 months. Statutory earnings per share are presumed to bounce 29% to €0.90. Previously, the analysts had been modelling revenues of €86b and earnings per share (EPS) of €0.91 in 2023. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

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XTRA:EOAN Earnings and Revenue Growth March 23rd 2023

Even though revenue forecasts increased, there was no change to the consensus price target of €11.11, suggesting the analysts are focused on earnings as the driver of value creation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values E.ON at €13.50 per share, while the most bearish prices it at €6.60. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. We would highlight that sales are expected to reverse, with a forecast 18% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 28% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 1.2% annually for the foreseeable future. The forecasts do look bearish for E.ON, since they're expecting it to shrink faster than the industry.

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. Notably, analysts also upgraded their revenue estimates, with sales performing well although E.ON's revenue growth is expected to trail that of the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at E.ON.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for E.ON going out to 2025, and you can see them free on our platform here..

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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