Earnings Miss: Contact Energy Limited Missed EPS By 16% And Analysts Are Revising Their Forecasts

Last week saw the newest annual earnings release from Contact Energy Limited (NZSE:CEN), an important milestone in the company's journey to build a stronger business. Statutory earnings per share of NZ$0.30 unfortunately missed expectations by 16%, although it was encouraging to see revenues of NZ$2.9b exceed expectations by 2.7%. 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 Contact Energy

After the latest results, the five analysts covering Contact Energy are now predicting revenues of NZ$3.50b in 2025. If met, this would reflect a sizeable 22% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 21% to NZ$0.36. Before this earnings report, the analysts had been forecasting revenues of NZ$3.39b and earnings per share (EPS) of NZ$0.38 in 2025. So it's pretty clear consensus is mixed on Contact Energy after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.

The consensus price target was unchanged at NZ$10.16, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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 Contact Energy analyst has a price target of NZ$11.20 per share, while the most pessimistic values it at NZ$8.70. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. It's clear from the latest estimates that Contact Energy's rate of growth is expected to accelerate meaningfully, with the forecast 22% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 2.5% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 0.1% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Contact Energy is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Contact Energy. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at NZ$10.16, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Contact Energy analysts - going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Contact Energy that you need to take into consideration.

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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.