Eos Energy Enterprises, Inc. (NASDAQ:EOSE) Just Reported And Analysts Have Been Cutting Their Estimates

Eos Energy Enterprises, Inc. (NASDAQ:EOSE) just released its latest third-quarter report and things are not looking great. It was not a great statutory result, with revenues coming in 47% lower than the analysts predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of US$1.12. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Our analysis indicates that EOSE is potentially overvalued!

Taking into account the latest results, the current consensus from Eos Energy Enterprises' six analysts is for revenues of US$162.9m in 2023, which would reflect a sizeable 787% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 46% to US$1.79. Before this earnings announcement, the analysts had been modelling revenues of US$195.0m and losses of US$1.74 per share in 2023. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The average price target fell 28% to US$4.70, implicitly signalling that lower earnings per share are a leading indicator for Eos Energy Enterprises' valuation. 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. There are some variant perceptions on Eos Energy Enterprises, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$3.50 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Eos Energy Enterprises shareholders.

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 analysts are definitely expecting Eos Energy Enterprises' growth to accelerate, with the forecast 5x annualised growth to the end of 2023 ranking favourably alongside historical growth of 135% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Eos Energy Enterprises to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Eos Energy Enterprises' future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Eos Energy Enterprises going out to 2024, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 6 warning signs for Eos Energy Enterprises you should be aware of, and 3 of them are concerning.

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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.