Time To Worry? Analysts Are Downgrading Their ACWA POWER Company (TADAWUL:2082) Outlook

Today is shaping up negative for ACWA POWER Company (TADAWUL:2082) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the three analysts covering ACWA POWER are now predicting revenues of ر.س6.2b in 2023. If met, this would reflect a decent 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to increase 8.5% to ر.س2.16. Prior to this update, the analysts had been forecasting revenues of ر.س7.2b and earnings per share (EPS) of ر.س2.69 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a considerable drop in earnings per share numbers as well.

Check out our latest analysis for ACWA POWER

The average price target climbed 5.7% to ر.س117 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting ACWA POWER's growth to accelerate, with the forecast 23% annualised growth to the end of 2023 ranking favourably alongside historical growth of 4.2% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect ACWA POWER to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of ACWA POWER.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for ACWA POWER going out to 2025, 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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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.