It's been a good week for Ormat Technologies, Inc. (NYSE:ORA) shareholders, because the company has just released its latest quarterly results, and the shares gained 4.6% to US$75.36. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$159m, statutory earnings beat expectations by a notable 23%, coming in at US$0.31 per share. 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.
Following last week's earnings report, Ormat Technologies' six analysts are forecasting 2021 revenues to be US$731.9m, approximately in line with the last 12 months. Statutory earnings per share are predicted to climb 17% to US$1.77. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$757.5m and earnings per share (EPS) of US$1.94 in 2021. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
The analysts made no major changes to their price target of US$69.33, suggesting the downgrades are not expected to have a long-term impact on Ormat Technologies' 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. Currently, the most bullish analyst values Ormat Technologies at US$78.00 per share, while the most bearish prices it at US$53.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Ormat Technologies' revenue growth will slow down substantially, with revenues next year expected to grow 1.9%, compared to a historical growth rate of 4.0% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.0% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Ormat Technologies.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Ormat Technologies. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Ormat Technologies going out to 2022, and you can see them free on our platform here..
Before you take the next step you should know about the 3 warning signs for Ormat Technologies (2 make us uncomfortable!) that we have uncovered.
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