Last week, you might have seen that Northland Power Inc. (TSE:NPI) released its quarterly result to the market. The early response was not positive, with shares down 4.2% to CA$42.86 in the past week. Revenues were CA$471m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at CA$0.40, an impressive 67% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for Northland Power from ten analysts is for revenues of CA$2.13b in 2021 which, if met, would be a reasonable 6.0% increase on its sales over the past 12 months. Statutory earnings per share are forecast to reduce 8.7% to CA$1.75 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CA$2.12b and earnings per share (EPS) of CA$1.77 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at CA$45.00. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Northland Power at CA$51.00 per share, while the most bearish prices it at CA$33.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Northland Power's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Northland Power's revenue growth will slow down substantially, with revenues next year expected to grow 6.0%, compared to a historical growth rate of 18% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.3% per year. Factoring in the forecast slowdown in growth, it seems obvious that Northland Power is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Northland Power'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 Northland Power. 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 Northland Power going out to 2024, and you can see them free on our platform here..
Plus, you should also learn about the 4 warning signs we've spotted with Northland Power (including 2 which don't sit too well with us) .
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. 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.
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