Results: Galp Energia, SGPS, S.A. Exceeded Expectations And The Consensus Has Updated Its Estimates

Galp Energia, SGPS, S.A. (ELI:GALP) shareholders are probably feeling a little disappointed, since its shares fell 2.7% to €19.71 in the week after its latest first-quarter results. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at €5.1b, statutory earnings beat expectations by a notable 49%, coming in at €0.49 per share. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Galp Energia SGPS

Taking into account the latest results, the most recent consensus for Galp Energia SGPS from 15 analysts is for revenues of €22.5b in 2024. If met, it would imply a decent 8.6% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to dive 25% to €1.22 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €21.7b and earnings per share (EPS) of €1.18 in 2024. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Despite these upgrades,the analysts have not made any major changes to their price target of €20.10, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. The most optimistic Galp Energia SGPS analyst has a price target of €25.00 per share, while the most pessimistic values it at €14.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 12% growth on an annualised basis. That is in line with its 11% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 1.3% annually. So it's clear that not only is revenue growth expected to be maintained, but Galp Energia SGPS is expected to grow meaningfully 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 Galp Energia SGPS' earnings potential next year. Fortunately, they also upgraded their revenue estimates, and our data indicates it is expected to perform better 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 Galp Energia SGPS. Long-term earnings power is much more important than next year's profits. We have forecasts for Galp Energia SGPS going out to 2026, and you can see them free on our platform here.

Even so, be aware that Galp Energia SGPS is showing 3 warning signs in our investment analysis , and 2 of those don't sit too well with us...

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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.