Upgrade: Analysts Just Made A Substantial Increase To Their Zespól Elektrowni Patnów-Adamów-Konin S.A. (WSE:ZEP) Forecasts

Shareholders in Zespól Elektrowni Patnów-Adamów-Konin S.A. (WSE:ZEP) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market seems to be pricing in some improvement in the business too, with the stock up 7.7% over the past week, closing at zł18.20. Could this big upgrade push the stock even higher?

After the upgrade, the dual analysts covering Zespól Elektrowni Patnów-Adamów-Konin are now predicting revenues of zł2.8b in 2022. If met, this would reflect a sizeable 35% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to tumble 87% to zł0.34 in the same period. However, before this estimates update, the consensus had been expecting revenues of zł2.5b and zł0.30 per share in losses. So we can see that this has sparked a pretty clear upgrade to expectations, with higher revenues anticipated to lead to profit sooner than previously forecast.

Check out our latest analysis for Zespól Elektrowni Patnów-Adamów-Konin

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of zł17.90, suggesting that the forecast performance does not have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Zespól Elektrowni Patnów-Adamów-Konin at zł24.70 per share, while the most bearish prices it at zł11.10. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Zespól Elektrowni Patnów-Adamów-Konin's past performance and to peers in the same industry. For example, we noticed that Zespól Elektrowni Patnów-Adamów-Konin's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 27% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 4.7% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 2.8% annually. Not only are Zespól Elektrowni Patnów-Adamów-Konin's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that the consensus now expects Zespól Elektrowni Patnów-Adamów-Konin to become profitable next year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Zespól Elektrowni Patnów-Adamów-Konin could be a good candidate for more research.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential risk with Zespól Elektrowni Patnów-Adamów-Konin, including concerns around earnings quality. You can learn more, and discover the 1 other risk we've identified, for 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.