Shareholders of SSE plc (LON:SSE) might be pleased to hear that analysts have just released a major update to their near-term forecasts. Consensus estimates suggest investors could expect a sizable increase in statutory revenue and earnings per share, with analysts modeling a real improvement in corporate performance.
After this upgrade, SSE’s 15 analysts now forecast revenues of £11 billion in 2023. This would represent a satisfying 3.2% improvement in sales over the past 12 months. Statutory earnings per share are expected to rise 77% to £1.70. Previously, analysts had modeled revenue of £9.9bn and earnings per share (EPS) of UK£1.60 in 2023. Sentiment certainly seems to have improved lately, with a nice rise in revenue and a slight increase in profit per share estimates.
See our latest analysis for SSE
Although analysts have raised their earnings estimates, there has been no change to the consensus price target of UK£20.17, suggesting the expected performance has no long-term impact. on the valuation of the company. There is, however, another way to think about price targets, and that is to look at the range of price targets offered by analysts, as a wide range of estimates could suggest a diverse view of possible outcomes for the market. business. There are varying perceptions on SSE, with the most bullish analyst pricing it at UK£22.00 and the most bearish at UK£17.38 per share. The low dispersion of estimates could suggest that the future of the company is relatively easy to assess or that analysts have a clear view of its prospects.
Of course, another way to look at these predictions is to put them in context with the industry itself. For example, we have noticed that the growth rate of SSE is expected to accelerate significantly, with revenue expected to show 6.5% growth by the end of 2023 on an annualized basis. That’s well above its historic decline of 30% per year over the past five years. What’s also interesting is that our data suggests that other companies (with analyst coverage) in a similar industry are expected to see revenue declines of 0.6% per year for the foreseeable future. So it’s pretty clear that SSE is set to grow faster than the industry at large.
The biggest lesson for us from these new estimates is that analysts have raised their earnings per share estimates, with an improvement in earnings power expected for this year. On the plus side, they also raised their earnings estimates and the company is expected to perform better than the broader market. Some investors might be disappointed to see the price target unchanged, but we believe improving fundamentals are generally positive – assuming these predictions come true! The ESS could therefore be a good candidate for more research.
Analysts are clearly in love with SSE right now, but before we dive in, you should know that we’ve identified some red flags with the company, such as its declining profit margins. You can find out more, and discover the 2 other risks that we have identified, for free on our platform here.
Of course, see the management of the company invest large sums of money in a stock can be just as useful as knowing if analysts are updating their estimates. So you can also search this free list of stocks that insiders buy.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and 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 financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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