The full-year results for Contact Energy Limited (NZSE:CEN) were released last week, making it a good time to revisit its performance. Contact Energy reported NZ$3.2b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of NZ$0.41 beat expectations, being 3.1% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, Contact Energy's five analysts currently expect revenues in 2027 to be NZ$3.20b, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 4.4% to NZ$0.41. In the lead-up to this report, the analysts had been modelling revenues of NZ$3.35b and earnings per share (EPS) of NZ$0.39 in 2027. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.
See our latest analysis for Contact Energy
There's been no real change to the average price target of NZ$10.39, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. 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. The most optimistic Contact Energy analyst has a price target of NZ$11.19 per share, while the most pessimistic values it at NZ$9.20. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Contact Energy's past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 1.2% annualised decline to the end of 2027. That is a notable change from historical growth of 8.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.4% per year. It's pretty clear that Contact Energy's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Contact Energy following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Still, earnings are more important to the intrinsic value of the business. The consensus price target held steady at NZ$10.39, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Contact Energy analysts - going out to 2029, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Contact Energy (at least 1 which is a bit unpleasant) , and understanding these should be part of your investment process.
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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.