Yahoo Finance Broker Revenue Forecasts For Drax Group plc (LON:DRX) Are Surging Higher
Drax Group plc (LON:DRX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.
Following the latest upgrade, Drax Group's seven analysts currently expect revenues in 2022 to be UK£6.6b, approximately in line with the last 12 months. Statutory earnings per share are presumed to surge 46% to UK£0.77. Prior to this update, the analysts had been forecasting revenues of UK£5.7b and earnings per share (EPS) of UK£0.73 in 2022. The most recent forecasts are noticeably more optimistic, with a nice gain to revenue estimates and a lift to earnings per share as well.
Check out our latest analysis for Drax Group
Despite these upgrades, the analysts have not made any major changes to their price target of UK£9.11, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Drax Group, with the most bullish analyst valuing it at UK£11.75 and the most bearish at UK£5.91 per share. 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 Drax Group's past performance and to peers in the same industry. We would highlight that Drax Group's revenue growth is expected to slow, with the forecast 3.0% annualised growth rate until the end of 2022 being well below the historical 8.8% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.7% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Drax Group.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Drax Group.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Drax Group going out to 2024, and you can see them free on our platform here..
We also provide an overview of the Drax Group Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
