Yahoo Finance Party Time: One Broker Just Made Major Increases To Their IGas Energy plc (LON:IGAS) Earnings Forecast
Celebrations may be in order for IGas Energy plc (LON:IGAS) shareholders, with the covering analyst delivering a significant upgrade to their statutory estimates for the company. The analyst greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
Following the upgrade, the current consensus from IGas Energy's lone analyst is for revenues of UK£39m in 2021 which - if met - would reflect a sizeable 40% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of UK£0.006 per share this year. Yet before this consensus update, the analyst had been forecasting revenues of UK£34m and losses of UK£0.013 per share in 2021. So we can see that this has sparked a pretty clear upgrade to expectations, with higher revenues anticipated to lead to profit sooner than previously forecast.
See our latest analysis for IGas Energy
Although the analyst has upgraded their earnings estimates, there was no change to the consensus price target of UK£0.47, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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 IGas Energy at UK£0.60 per share, while the most bearish prices it at UK£0.35. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await IGas Energy shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that IGas Energy is forecast to grow faster in the future than it has in the past, with revenues expected to display 40% annualised growth until the end of 2021. If achieved, this would be a much better result than the 20% annual decline over the past three years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 2.7% annually. Not only are IGas Energy's revenues expected to improve, it seems that the analyst is also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that there is now an expectation for IGas Energy to become profitable this year, compared to previous expectations of a loss. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at IGas Energy.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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.
