Drax Group plc (LON:DRX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
Following this upgrade, Drax Group's eight analysts are forecasting 2023 revenues to be UK£8.3b, approximately in line with the last 12 months. Before the latest update, the analysts were foreseeing UK£8.0b of revenue in 2023. So there's been a pretty clear uptick in analyst sentiment after this consensus update, given the modest lift to this year's revenue forecasts.
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. We would highlight that Drax Group's revenue growth is expected to slow, with the forecast 0.5% annualised growth rate until the end of 2023 being well below the historical 15% p.a. growth over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 9.9% per year. So it's clear that despite the slowdown in growth, Drax Group is still expected to grow meaningfully faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They're also forecasting for revenues to perform better than companies in the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Drax Group.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 4 potential flags with Drax Group, including a weak balance sheet. You can learn more, and discover the 3 other flags we've identified, for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, 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.