Yahoo Finance Capital Power Corporation Beat Revenue Forecasts By 84%: Here's What Analysts Are Forecasting Next
It's been a good week for Capital Power Corporation (TSE:CPX) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.1% to CA$36.05. Revenue of CA$1.1b came in a notable 84% ahead of expectations, while statutory earnings of CA$6.04 were in line with what the analysts had been forecasting. 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. 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 Capital Power
After the latest results, the consensus from Capital Power's eight analysts is for revenues of CA$2.94b in 2024, which would reflect a disturbing 25% decline in revenue compared to the last year of performance. Statutory earnings per share are expected to descend 20% to CA$3.89 in the same period. Before this earnings report, the analysts had been forecasting revenues of CA$2.14b and earnings per share (EPS) of CA$2.93 in 2024. There has definitely been an improvement in perception after these results, with the analysts noticeably increasing both their earnings and revenue estimates.
Despite these upgrades,the analysts have not made any major changes to their price target of CA$41.55, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Capital Power, with the most bullish analyst valuing it at CA$48.00 and the most bearish at CA$36.00 per share. This is a very narrow spread of estimates, implying either that Capital Power is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 32% by the end of 2024. This indicates a significant reduction from annual growth of 23% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.2% per year. It's pretty clear that Capital Power's revenues are expected to perform substantially 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 Capital Power's earnings potential next year. They also upgraded their revenue estimates for next year, even though it is expected to grow slower 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.
Following on from that line of thought, we think that 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 Capital Power going out to 2026, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 5 warning signs for Capital Power (of which 2 shouldn't be ignored!) you should know about.
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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.
