Altus Power, Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Last week, you might have seen that Altus Power, Inc. (NYSE:AMPS) released its third-quarter result to the market. The early response was not positive, with shares down 5.3% to US$7.63 in the past week. The results don't look great, especially considering that the analysts had been forecasting a profit and Altus Power delivered a statutory loss of US$0.63 per share. Revenues of US$30m did beat expectations by 3.5% though. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Our analysis indicates that AMPS is potentially overvalued!

Following the latest results, Altus Power's six analysts are now forecasting revenues of US$184.7m in 2023. This would be a huge 92% improvement in sales compared to the last 12 months. Altus Power is also expected to turn profitable, with statutory earnings of US$0.12 per share. Before this earnings report, the analysts had been forecasting revenues of US$186.0m and earnings per share (EPS) of US$0.17 in 2023. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.

The average price target fell 5.1% to US$12.50, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. Currently, the most bullish analyst values Altus Power at US$14.00 per share, while the most bearish prices it at US$10.00. 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 Altus Power 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. It's clear from the latest estimates that Altus Power's rate of growth is expected to accelerate meaningfully, with the forecast 69% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 35% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.9% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Altus Power to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are 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 Altus Power. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Altus Power analysts - going out to 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Altus Power (2 don't sit too well with us) 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.