The RWE Aktiengesellschaft (ETR:RWE) Analysts Have Been Trimming Their Sales Forecasts

One thing we could say about the analysts on RWE Aktiengesellschaft (ETR:RWE) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the latest consensus from RWE's 14 analysts is for revenues of €36b in 2024, which would reflect a huge 25% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 45% to €2.83. Previously, the analysts had been modelling revenues of €40b and earnings per share (EPS) of €2.84 in 2024. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a measurable cut to revenues and reconfirming their earnings per share estimates.

See our latest analysis for RWE

The consensus has reconfirmed its price target of €47.69, showing that the analysts don't expect weaker sales expectationsthis year to have a material impact on RWE's market value.

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. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 25% growth on an annualised basis. That is in line with its 26% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 9.7% per year. So although RWE is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on RWE after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with RWE's financials, such as concerns around earnings quality. Learn more, and discover the 1 other warning sign we've identified, for free on our platform 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.