SSE plc Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

SSE plc (LON:SSE) shareholders are probably feeling a little disappointed, since its shares fell 5.0% to UK£17.41 in the week after its latest yearly results. SSE missed revenue estimates by 7.7%, coming in atUK£10b, although statutory earnings per share (EPS) of UK£1.57 beat expectations, coming in 2.1% ahead of analyst estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for SSE

Taking into account the latest results, the current consensus from SSE's 13 analysts is for revenues of UK£13.0b in 2025. This would reflect a huge 24% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to rise 6.1% to UK£1.67. In the lead-up to this report, the analysts had been modelling revenues of UK£11.5b and earnings per share (EPS) of UK£1.62 in 2025. The analysts seem more optimistic after the latest results, with a nice increase in revenue and a small increase to earnings per share estimates.

Despite these upgrades,the analysts have not made any major changes to their price target of UK£20.66, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values SSE at UK£24.24 per share, while the most bearish prices it at UK£16.60. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. It's clear from the latest estimates that SSE's rate of growth is expected to accelerate meaningfully, with the forecast 24% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 14% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.2% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect SSE to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around SSE's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on SSE. Long-term earnings power is much more important than next year's profits. We have forecasts for SSE going out to 2027, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for SSE that we have uncovered.

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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.