Stock Analysis

Enlight Renewable Energy Ltd Just Missed Earnings - But Analysts Have Updated Their Models

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The analysts might have been a bit too bullish on Enlight Renewable Energy Ltd (TLV:ENLT), given that the company fell short of expectations when it released its full-year results last week. Results showed a clear earnings miss, with US$192m revenue coming in 3.7% lower than what the analystsexpected. Statutory earnings per share (EPS) of US$0.26 missed the mark badly, arriving some 52% below what was expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Enlight Renewable Energy

TASE:ENLT Earnings and Revenue Growth March 18th 2023

Taking into account the latest results, the current consensus from Enlight Renewable Energy's six analysts is for revenues of US$294.4m in 2023, which would reflect a huge 53% increase on its sales over the past 12 months. Per-share earnings are expected to swell 13% to US$0.24. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$302.9m and earnings per share (EPS) of US$0.73 in 2023. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.

The analysts made no major changes to their price target of ₪81.99, suggesting the downgrades are not expected to have a long-term impact on Enlight Renewable Energy's valuation. 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 Enlight Renewable Energy at ₪87.36 per share, while the most bearish prices it at ₪76.18. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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 analysts are definitely expecting Enlight Renewable Energy's growth to accelerate, with the forecast 53% annualised growth to the end of 2023 ranking favourably alongside historical growth of 44% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.0% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Enlight Renewable Energy to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Enlight Renewable Energy. They also downgraded their revenue estimates, although industry data suggests that Enlight Renewable Energy's revenues are expected to grow faster than the wider industry. The consensus price target held steady at ₪81.99, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Enlight Renewable Energy analysts - going out to 2025, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Enlight Renewable Energy (at least 2 which can't be ignored) , and understanding them should be part of your investment process.

Valuation is complex, but we're helping make it simple.

Find out whether Enlight Renewable Energy is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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