Earnings Miss: Constellation Energy Corporation Missed EPS And Analysts Are Revising Their Forecasts

As you might know, Constellation Energy Corporation (NASDAQ:CEG) recently reported its third-quarter numbers. Revenues came in 54% better than analyst models predicted, at US$6.1b. The company was unable to deliver a profit however, with statutory losses of US$0.57 well below the profits that the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Constellation Energy

Taking into account the latest results, the nine analysts covering Constellation Energy provided consensus estimates of US$17.4b revenue in 2023, which would reflect a stressful 23% decline on its sales over the past 12 months. Earnings are expected to improve, with Constellation Energy forecast to report a statutory profit of US$4.38 per share. In the lead-up to this report, the analysts had been modelling revenues of US$16.2b and earnings per share (EPS) of US$4.37 in 2023. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a modest lift to to revenue forecasts.

Even though revenue forecasts increased, there was no change to the consensus price target of US$97.07, suggesting the analysts are focused on earnings as the driver of value creation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Constellation Energy at US$121 per share, while the most bearish prices it at US$54.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 19% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 1.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.6% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Constellation Energy is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at US$97.07, with the latest estimates not enough to have an impact on their price targets.

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 Constellation Energy going out to 2024, and you can see them free on our platform here..

It might also be worth considering whether Constellation Energy's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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.