Here’s what analysts say will happen next

Shareholders could have noticed this Polaris Renewable Energy Inc. (TSE:PIF) reported its second-quarter results at this time last week. The early reaction was not positive, with shares falling 4.5% to C$12.38 last week. Revenue of $19 million was in line with forecasts, although statutory earnings per share (EPS) missed expectations at $0.05, or 9.1% below estimates. Analysts typically update their forecasts with each earnings report, and we can gauge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to read the latest (statutory) analyst forecasts following next year’s results.

See our latest analysis for Polaris Renewable Energy

Following last week’s earnings report, five Polaris Renewable Energy analysts are forecasting 2024 revenue of $78.2 million, roughly in line with the last 12 months. Earnings per share are expected to increase 20% to $0.44. Prior to this report, the analysts had been modeling revenue of $78.0 million and earnings per share (EPS) of $0.46 in 2024. The analysts seem to be slightly more negative on the company following its latest results, given the slight reduction in their earnings per share numbers for next year.

It may come as a surprise that the consensus price target remains largely unchanged at CAD$20.77, with analysts clearly suggesting that the projected earnings decline won’t have a big impact on valuation. The consensus price target is simply an average of individual analyst targets, so it can be useful to see how wide the range of underlying estimates is. Currently, the most optimistic analysts value Polaris Renewable Energy at CAD$22.03 per share, while the most pessimistic ones value it at CAD$19.02. The tight spread of estimates could suggest that the company’s future is relatively easy to value, or that analysts have a strong view of its prospects.

Now, looking at the bigger picture, one way we can understand these forecasts is to see how they compare to past performance and industry growth estimates. It’s clear from the latest estimates that Polaris Renewable Energy’s growth rate is set to accelerate significantly, with a projected annual revenue growth of 3.3% through the end of 2024, which is noticeably faster than the historical growth of 0.4% per year over the past five years. Compare this to other companies in the same industry, which have a projected revenue growth of 4.4% per year. It seems obvious that while the prospects for future growth are brighter than in the recent past, Polaris Renewable Energy is expected to grow at a slower pace than the broader industry.

The story continues

Summary

The most important thing to take away is that analysts have lowered their earnings per share estimates, showing that there has been a clear drop in sentiment following these results. On the positive side, there was no major change to revenue estimates; although the forecasts suggest that they will underperform the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not changed much with the latest estimates.

With that in mind, we still think the longer-term trajectory of the business is much more important to investors. We have estimates – from multiple Polaris Renewable Energy analysts – going out to 2025, which you can see for free on our platform here.

There are still risks to consider, for example Polaris Renewable Energy has 3 warning signs (and one that’s a little unpleasant) we thought you should know about.

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This Simply Wall St article is for general information purposes only. Our commentary is based solely on historical data and analyst forecasts, and is based on an objective methodology. Our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamental data. Please note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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