As you might know, Edison International (NYSE:EIX) last week released its latest quarterly, and things did not turn out so great for shareholders. Unfortunately, Edison International delivered a serious earnings miss. Revenues of US$2.8b were 13% below expectations, and statutory earnings per share of US$0.50 missed estimates by 25%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Edison International from nine analysts is for revenues of US$13.2b in 2020 which, if met, would be a reasonable 7.5% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 31% to US$4.47. Before this earnings report, the analysts had been forecasting revenues of US$13.3b and earnings per share (EPS) of US$4.30 in 2020. So the consensus seems to have become somewhat more optimistic on Edison International's earnings potential following these results.
There's been no major changes to the consensus price target of US$70.40, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Edison International, with the most bullish analyst valuing it at US$87.00 and the most bearish at US$59.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Edison International'sgrowth to accelerate, with the forecast 7.5% growth ranking favourably alongside historical growth of 1.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.0% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Edison International is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Edison International 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. 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 in mind, we wouldn't be too quick to come to a conclusion on Edison International. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Edison International analysts - going out to 2022, and you can see them free on our platform here.
Even so, be aware that Edison International is showing 4 warning signs in our investment analysis , and 2 of those are significant...
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