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A week ago, Global Water Resources, Inc. (NASDAQ:GWRS) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 3.8% to hit US$12m. Global Water Resources also reported a statutory profit of US$0.02, which was an impressive 33% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Global Water Resources' two analysts are now forecasting revenues of US$55.9m in 2025. This would be an okay 4.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to decrease 8.3% to US$0.19 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$55.6m and earnings per share (EPS) of US$0.22 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.
Check out our latest analysis for Global Water Resources
The average price target fell 6.1% to US$15.50, with reduced earnings forecasts clearly tied to a lower valuation estimate.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Global Water Resources' revenue growth is expected to slow, with the forecast 5.9% annualised growth rate until the end of 2025 being well below the historical 8.4% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.3% annually. So it's pretty clear that, while Global Water Resources' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
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. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.