Rainbows and Unicorns: The CNTEE Transelectrica SA (BVB:TEL) Analyst Just Became A Lot More Optimistic

Celebrations may be in order for CNTEE Transelectrica SA (BVB:TEL) shareholders, with the covering analyst delivering a significant upgrade to their statutory estimates for the company. 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.

Following the upgrade, the latest consensus from CNTEE Transelectrica's sole analyst is for revenues of RON4.0b in 2022, which would reflect a sizeable 47% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to dive 98% to RON0.03 in the same period. Before this latest update, the analyst had been forecasting revenues of RON2.6b and earnings per share (EPS) of RON0.33 in 2022. Although revenues are expected to increase, the analyst has become more pessimistic on earnings, given the pretty serious decline to EPS estimates following the latest update.

See our latest analysis for CNTEE Transelectrica

There's been no major changes to analyst price target of RON21.20, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' 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. There are some variant perceptions on CNTEE Transelectrica, with the most bullish analyst valuing it at RON22.60 and the most bearish at RON19.80 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analyst has a clear view on its prospects.

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. One thing stands out from these estimates, which is that CNTEE Transelectrica is forecast to grow faster in the future than it has in the past, with revenues expected to display 36% annualised growth until the end of 2022. If achieved, this would be a much better result than the 4.2% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 1.9% per year. So it looks like CNTEE Transelectrica is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for CNTEE Transelectrica. They also upgraded their revenue estimates for next year, and sales are expected to grow faster 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 CNTEE Transelectrica could be a good candidate for more research.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2024, which can be seen 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.