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RWE Aktiengesellschaft (ETR:RWE) Analysts Just Slashed This Year's Revenue Estimates By 10%

The analysts covering RWE Aktiengesellschaft (ETR:RWE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the most recent consensus for RWE from its 14 analysts is for revenues of €36b in 2024 which, if met, would be a reasonable 3.4% increase on its sales over the past 12 months. Statutory earnings per share are presumed to surge 45% to €2.83. Previously, the analysts had been modelling revenues of €40b and earnings per share (EPS) of €2.84 in 2024. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a measurable cut to revenues and some minor tweaks to earnings numbers.

See our latest analysis for RWE

earnings-and-revenue-growth
earnings-and-revenue-growth

The consensus has reconfirmed its price target of €47.69, showing that the analysts don't expect weaker sales expectationsthis year to have a material impact on RWE's market value.

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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 RWE's revenue growth is expected to slow, with the forecast 3.4% annualised growth rate until the end of 2024 being well below the historical 28% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.4% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than RWE.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on RWE after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with RWE's business, like its declining profit margins. Learn more, and discover the 2 other risks we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.