Analysts' Revenue Estimates For Centrica plc (LON:CNA) Are Surging Higher

Centrica plc (LON:CNA) 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 Centrica will make substantially more sales than they'd previously expected. Investor sentiment seems to be improving too, with the share price up 7.0% to UK£1.05 over the past 7 days. Could this big upgrade push the stock even higher?

Following the upgrade, the most recent consensus for Centrica from its twelve analysts is for revenues of UK£50b in 2023 which, if met, would be a sizeable 113% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of UK£0.21 per share this year. Previously, the analysts had been modelling revenues of UK£26b and earnings per share (EPS) of UK£0.20 in 2023. The most recent forecasts are noticeably more optimistic, with a considerable lift to revenue estimates and a lift to earnings per share as well.

View our latest analysis for Centrica

Despite these upgrades, the analysts have not made any major changes to their price target of UK£1.30, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Centrica analyst has a price target of UK£1.65 per share, while the most pessimistic values it at UK£0.50. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. For example, we noticed that Centrica's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 113% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 10% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 1.5% per year. So it looks like Centrica is expected to grow faster than its competitors, at least for a while.

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. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Centrica.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Centrica going out to 2025, and you can see them free on our platform here..

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.