Here's What Analysts Are Forecasting For REN - Redes Energéticas Nacionais, SGPS, S.A. (ELI:RENE) After Its Yearly Results

Simply Wall St
·4 min read

It's been a pretty great week for REN - Redes Energéticas Nacionais, SGPS, S.A. (ELI:RENE) shareholders, with its shares surging 12% to €2.26 in the week since its latest yearly results. Revenues of €750m beat expectations by a respectable 2.3%, although statutory losses per share increased. REN - Redes Energéticas Nacionais SGPS lost , which was 100% more than what the analysts had included in their models. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for REN - Redes Energéticas Nacionais SGPS

ENXTLS:RENE Past and Future Earnings March 28th 2020
ENXTLS:RENE Past and Future Earnings March 28th 2020

Following the recent earnings report, the consensus fromeight analysts covering REN - Redes Energéticas Nacionais SGPS is for revenues of €724.3m in 2020, implying a small 3.4% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to drop 12% to €0.16 in the same period. Before this earnings report, the analysts had been forecasting revenues of €723.7m and earnings per share (EPS) of €0.15 in 2020. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of €2.78, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock'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 REN - Redes Energéticas Nacionais SGPS analyst has a price target of €3.40 per share, while the most pessimistic values it at €2.35. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await REN - Redes Energéticas Nacionais SGPS shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the REN - Redes Energéticas Nacionais SGPS's past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that REN - Redes Energéticas Nacionais SGPS's decline is expected to accelerate, with revenues forecast to fall 3.4% next year, topping off a historical decline of 1.4% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 3.6% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect REN - Redes Energéticas Nacionais SGPS to suffer worse than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around REN - Redes Energéticas Nacionais SGPS's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that REN - Redes Energéticas Nacionais SGPS's revenues are expected to 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 in mind, we wouldn't be too quick to come to a conclusion on REN - Redes Energéticas Nacionais SGPS. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for REN - Redes Energéticas Nacionais SGPS going out to 2024, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 2 warning signs for REN - Redes Energéticas Nacionais SGPS you should be aware of.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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