Shareholders in United Energy Group Limited (HKG:467) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
Following the upgrade, the most recent consensus for United Energy Group from its dual analysts is for revenues of HK$10b in 2022 which, if met, would be a substantial 37% increase on its sales over the past 12 months. Statutory earnings per share are presumed to jump 84% to HK$0.14. Previously, the analysts had been modelling revenues of HK$9.1b and earnings per share (EPS) of HK$0.10 in 2022. 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.
As a result, it might be a surprise to see that the analysts have cut their price target 11% to HK$1.26, which could suggest the forecast improvement in performance is not expected to last. 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. Currently, the most bullish analyst values United Energy Group at HK$1.40 per share, while the most bearish prices it at HK$1.12. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the United Energy Group's past performance and to peers in the same industry. The analysts are definitely expecting United Energy Group's growth to accelerate, with the forecast 37% annualised growth to the end of 2022 ranking favourably alongside historical growth of 13% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.9% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect United Energy Group 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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, United Energy Group could be one for the watch list.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2024, which can be seen for 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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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.
United Energy Group
United Energy Group Limited, an investment holding company, engages in the investment and operation of upstream oil, natural gas, and other energy related businesses in South Asia, the Middle East, and North Africa.
High growth potential with excellent balance sheet.