California Water Service Group (NYSE:CWT) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 8.8% to hit US$265m. California Water Service Group also reported a statutory profit of US$0.71, which was an impressive 29% above what the analysts had forecast. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following last week's earnings report, California Water Service Group's five analysts are forecasting 2025 revenues to be US$1.01b, approximately in line with the last 12 months. Statutory earnings per share are predicted to climb 12% to US$2.55. Before this earnings report, the analysts had been forecasting revenues of US$1.01b and earnings per share (EPS) of US$2.34 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
Check out our latest analysis for California Water Service Group
The consensus price target was unchanged at US$55.60, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on California Water Service Group, with the most bullish analyst valuing it at US$60.00 and the most bearish at US$52.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that California Water Service Group's revenue growth is expected to slow, with the forecast 3.7% annualised growth rate until the end of 2025 being well below the historical 5.6% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.3% per year. Factoring in the forecast slowdown in growth, it seems obvious that California Water Service Group is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around California Water Service Group's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that California Water Service Group's revenue is expected to perform worse than the wider industry. 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.
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 California Water Service Group analysts - going out to 2027, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for California Water Service Group you should be aware of, and 1 of them makes us a bit uncomfortable.
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