A week ago, Atlantica Sustainable Infrastructure plc (NASDAQ:AY) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. Revenues and losses per share were both better than expected, with revenues of US$243m leading estimates by 2.4%. Statutory losses were smaller than the analystsexpected, coming in at US$0.05 per share. The analysts typically update their forecasts at each earnings report, and we can judge 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 see the analysts latest (statutory) post-earnings forecasts for next year.
NasdaqGS:AY Earnings and Revenue Growth May 12th 2024
Following the latest results, Atlantica Sustainable Infrastructure's seven analysts are now forecasting revenues of US$1.16b in 2024. This would be an okay 4.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to crater 46% to US$0.23 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.16b and earnings per share (EPS) of US$0.41 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
The consensus price target held steady at US$23.23, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Atlantica Sustainable Infrastructure, with the most bullish analyst valuing it at US$33.00 and the most bearish at US$20.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Atlantica Sustainable Infrastructure's rate of growth is expected to accelerate meaningfully, with the forecast 6.5% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 1.9% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 5.6% per year. Atlantica Sustainable Infrastructure is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$23.23, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Atlantica Sustainable Infrastructure going out to 2026, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 3 warning signs for Atlantica Sustainable Infrastructure (1 is a bit unpleasant!) that you need to be mindful of.
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