OGE Energy Corp. (NYSE:OGE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that OGE Energy will make substantially more sales than they'd previously expected.
Following the latest upgrade, the current consensus, from the five analysts covering OGE Energy, is for revenues of US$2.6b in 2021, which would reflect a disturbing 23% reduction in OGE Energy's sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$2.3b in 2021. It looks like there's been a clear increase in optimism around OGE Energy, given the nice gain to revenue forecasts.
We'd point out that there was no major changes to their price target of US$36.10, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 OGE Energy, with the most bullish analyst valuing it at US$39.00 and the most bearish at US$32.00 per share. This is a very narrow spread of estimates, implying either that OGE Energy is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 29% by the end of 2021. This indicates a significant reduction from annual growth of 2.0% 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 3.7% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - OGE Energy is expected to lag the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for OGE Energy this year. They also expect company revenue to perform worse than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at OGE Energy.
Analysts are definitely bullish on OGE Energy, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including recent substantial insider selling. You can learn more, and discover the 1 other risk we've identified, for 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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