Yahoo Finance Algonquin Power & Utilities Corp. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts
Algonquin Power & Utilities Corp. (TSE:AQN) came out with its first-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues fell 9.5% short of expectations, at US$465m. Earnings correspondingly dipped, with Algonquin Power & Utilities reporting a statutory loss of US$0.13 per share, whereas the analysts had previously modelled a profit in this period. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Algonquin Power & Utilities
Following the latest results, Algonquin Power & Utilities' eight analysts are now forecasting revenues of US$1.86b in 2020. This would be a meaningful 15% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to plummet 56% to US$0.46 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.80b and earnings per share (EPS) of US$0.55 in 2020. So it's pretty clear the analysts have mixed opinions on Algonquin Power & Utilities after the latest results; even though they upped their revenue numbers, it came at the cost of a real cut to per-share earnings expectations.
The consensus price target was unchanged at US$13.70, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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 Algonquin Power & Utilities, with the most bullish analyst valuing it at US$17.00 and the most bearish at US$10.72 per share. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Algonquin Power & Utilities' revenue growth is expected to slow, with forecast 15% increase next year well below the historical 19%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.0% next year. So it's pretty clear that, while Algonquin Power & Utilities' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Algonquin Power & Utilities. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$13.70, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Algonquin Power & Utilities. Long-term earnings power is much more important than next year's profits. We have forecasts for Algonquin Power & Utilities going out to 2024, and you can see them free on our platform here.
Even so, be aware that Algonquin Power & Utilities is showing 6 warning signs in our investment analysis , and 1 of those is a bit concerning...
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