Analysts Have Just Cut Their ACWA POWER Company (TADAWUL:2082) Revenue Estimates By 16%

One thing we could say about the analysts on ACWA POWER Company (TADAWUL:2082) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Bidders are definitely seeing a different story, with the stock price of ر.س294 reflecting a 11% rise in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

Following the downgrade, the latest consensus from ACWA POWER's five analysts is for revenues of ر.س7.3b in 2024, which would reflect a notable 19% improvement in sales compared to the last 12 months. Per-share earnings are expected to grow 18% to ر.س2.69. Prior to this update, the analysts had been forecasting revenues of ر.س8.6b and earnings per share (EPS) of ر.س2.97 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a small dip in EPS estimates to boot.

View our latest analysis for ACWA POWER

What's most unexpected is that the consensus price target rose 14% to ر.س188, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting ACWA POWER's growth to accelerate, with the forecast 19% annualised growth to the end of 2024 ranking favourably alongside historical growth of 8.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that ACWA POWER is expected to grow much faster than its industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for ACWA POWER. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of ACWA POWER going forwards.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple ACWA POWER analysts - going out to 2026, and you can see them 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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