Analysts Just Made An Incredible Upgrade To Their Genel Energy plc (LON:GENL) Forecasts

Genel Energy plc (LON:GENL) 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.

Following the upgrade, the most recent consensus for Genel Energy from its six analysts is for revenues of US$325m in 2021 which, if met, would be a major 104% increase on its sales over the past 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$0.31 in per-share earnings. Previously, the analysts had been modelling revenues of US$278m and earnings per share (EPS) of US$0.24 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for Genel Energy

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$2.90, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Genel Energy analyst has a price target of US$2.34 per share, while the most pessimistic values it at US$1.57. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Genel Energy's rate of growth is expected to accelerate meaningfully, with the forecast 104% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 4.2% 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 5.3% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Genel Energy is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Genel Energy could be a good candidate for more research.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Genel Energy analysts - going out to 2023, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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