Celebrations may be in order for Greenvolt - Energias Renováveis, S.A. (ELI:GVOLT) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. Investors have been pretty optimistic on Greenvolt - Energias Renováveis too, with the stock up 15% to €6.84 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the upgrade, the most recent consensus for Greenvolt - Energias Renováveis from its five analysts is for revenues of €201m in 2022 which, if met, would be a substantial 42% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 309% to €0.27. Before this latest update, the analysts had been forecasting revenues of €182m and earnings per share (EPS) of €0.25 in 2022. The forecasts seem more optimistic now, with a nice increase in revenue and a slight bump in earnings per share estimates.
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of €7.18, suggesting that the forecast performance does not have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Greenvolt - Energias Renováveis analyst has a price target of €8.00 per share, while the most pessimistic values it at €6.40. This is a very narrow spread of estimates, implying either that Greenvolt - Energias Renováveis is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Greenvolt - Energias Renováveis' growth to accelerate, with the forecast 42% annualised growth to the end of 2022 ranking favourably alongside historical growth of 27% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Greenvolt - Energias Renováveis is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Greenvolt - Energias Renováveis.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential warning signs with Greenvolt - Energias Renováveis, including its declining profit margins. You can learn more, and discover the 2 other warning signs we've identified, 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.