US$10.67: That's What Analysts Think ReneSola Ltd (NYSE:SOL) Is Worth After Its Latest Results

It's been a good week for ReneSola Ltd (NYSE:SOL) shareholders, because the company has just released its latest quarterly results, and the shares gained 7.6% to US$5.50. ReneSola's revenues suffered a miss, falling 43% short of forecasts, at US$8.2m. Statutory earnings per share (EPS) however performed much better, reaching break-even. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for ReneSola

After the latest results, the three analysts covering ReneSola are now predicting revenues of US$105.9m in 2022. If met, this would reflect a major 111% improvement in sales compared to the last 12 months. ReneSola is also expected to turn profitable, with statutory earnings of US$0.097 per share. Before this earnings report, the analysts had been forecasting revenues of US$107.2m and earnings per share (EPS) of US$0.12 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

It might be a surprise to learn that the consensus price target fell 7.2% to US$10.67, with the analysts clearly linking lower forecast earnings to the performance of the stock price. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on ReneSola, with the most bullish analyst valuing it at US$12.00 and the most bearish at US$10.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. For example, we noticed that ReneSola's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 3x growth to the end of 2022 on an annualised basis. That is well above its historical decline of 15% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 6.8% annually. So it looks like ReneSola is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ReneSola. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on ReneSola. Long-term earnings power is much more important than next year's profits. We have forecasts for ReneSola going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for ReneSola that you should be aware of.

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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.