Entergy Corporation (NYSE:ETR) came out with its full-year results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. Revenues were US$11b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$6.30 were also better than expected, beating analyst predictions by 18%. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
After the latest results, the seven analysts covering Entergy are now predicting revenues of US$11.8b in 2020. If met, this would reflect a meaningful 8.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to descend 12% to US$5.62 in the same period. Before this earnings report, analysts had been forecasting revenues of US$11.6b and earnings per share (EPS) of US$5.61 in 2020. 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.
There were no changes to revenue or earnings estimates or the price target of US$132, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Entergy analyst has a price target of US$150 per share, while the most pessimistic values it at US$103. 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 Entergy shareholders.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Entergy's past performance and to peers in the same market. One thing stands out from these estimates, which is that analysts are forecasting Entergy to grow faster in the future than it has in the past, with revenues expected to grow 8.4%. If achieved, this would be a much better result than the 2.0% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue grow 3.0% per year. So it looks like Entergy is expected to grow faster than its competitors, at least for a while.
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. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. 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.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Entergy going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Entergy's balance sheet, and whether we think Entergy is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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