The analysts covering Capital Power Corporation( TSE:CPX ) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the latest downgrade, the current consensus, from the six analysts covering Capital Power, is for revenues of CA$3.7b in 2026, which would reflect a discernible 2.8% reduction in Capital Power's sales over the past 12 months. Statutory earnings per share are presumed to jump 1,176% to CA$1.96. Before this latest update, the analysts had been forecasting revenues of CA$4.2b and earnings per share (EPS) of CA$2.29 in 2026. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.
Check out our latest analysis for Capital Power
Despite the cuts to forecast earnings, there was no real change to the CA$74.21 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 3.8% annualised revenue decline to the end of 2026. That is a notable change from historical growth of 16% 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 5.6% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Capital Power is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Capital Power after the downgrade.
That said, the analysts might have good reason to be negative on Capital Power, given the risk of cutting its dividend. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection pointis to track whether management are buying or selling, with our free list of growing companies backed by insiders .
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This article by Simply Wall St is general in nature.
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