Yahoo Finance Growth Investors: Industry Analysts Just Upgraded Their Diversified Energy Company PLC (LON:DEC) Revenue Forecasts By 16%
Diversified Energy Company PLC (LON:DEC) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Diversified Energy will make substantially more sales than they'd previously expected.
After the upgrade, the three analysts covering Diversified Energy are now predicting revenues of US$935m in 2024. If met, this would reflect a decent 16% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to plunge 92% to US$1.33 in the same period. Previously, the analysts had been modelling revenues of US$807m and earnings per share (EPS) of US$1.33 in 2024. There's clearly been a surge in bullishness around the company's sales pipeline, even if there's no real change in earnings per share forecasts.
Check out our latest analysis for Diversified Energy
It may not be a surprise to see that the analysts have reconfirmed their price target of US$29.92, implying that the uplift in sales is not expected to greatly contribute to Diversified Energy's valuation in the near term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Diversified Energy at US$45.55 per share, while the most bearish prices it at US$12.72. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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 Diversified Energy's revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2024 being well below the historical 31% 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 1.4% per year. So it's clear that despite the slowdown in growth, Diversified Energy is still expected to grow meaningfully faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than 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 Diversified Energy.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 4 potential risks with Diversified Energy, including a weak balance sheet. For more information, you can click through to our platform to learn more about this and the 2 other risks we've identified .
You can also see our analysis of Diversified Energy's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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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.
