Analysts Just Made A Neat Upgrade To Their RWE Aktiengesellschaft (ETR:RWE) Forecasts

RWE Aktiengesellschaft (ETR:RWE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After the upgrade, the 16 analysts covering RWE are now predicting revenues of €43b in 2023. If met, this would reflect a decent 17% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 39% to €4.92. Before this latest update, the analysts had been forecasting revenues of €40b and earnings per share (EPS) of €4.43 in 2023. So it seems there's been a definite increase in optimism about RWE's future following the latest consensus numbers, with a decent improvement in the earnings per share forecasts in particular.

See our latest analysis for RWE

Despite these upgrades, the analysts have not made any major changes to their price target of €53.04, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth.

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. It's clear from the latest estimates that RWE's rate of growth is expected to accelerate meaningfully, with the forecast 37% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 28% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.3% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect RWE to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at RWE.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 4 potential warning signs with RWE, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 2 other warning signs we've identified .

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.