Yahoo Finance Analysts Just Made A Stunning Upgrade To Their Centrica plc (LON:CNA) Forecasts
Shareholders in Centrica plc (LON:CNA) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. Investor sentiment seems to be improving too, with the share price up 7.3% to UK£1.05 over the past 7 days. Could this big upgrade push the stock even higher?
After this upgrade, Centrica's twelve analysts are now forecasting revenues of UK£50b in 2023. This would be a huge 113% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of UK£0.23 per share this year. Previously, the analysts had been modelling revenues of UK£26b and earnings per share (EPS) of UK£0.20 in 2023. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
Check out our latest analysis for Centrica
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of UK£1.30, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Centrica analyst has a price target of UK£1.65 per share, while the most pessimistic values it at UK£0.50. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Centrica's past performance and to peers in the same industry. For example, we noticed that Centrica's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 113% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 10% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 1.5% per year. Not only are Centrica's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Centrica could be a good candidate for more research.
Still, 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 Centrica going out to 2025, and you can see them 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.
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.
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