Digitalization And Sustainable Agriculture Will Transform Brazil's Markets

Key Takeaways

• Rapid execution in new markets and facilities, combined with operational leverage, could deliver outsized growth in sales volumes and margins versus consensus.
  
• Strong positioning in biofuels, precision agriculture, and customer loyalty enables recurring high-margin revenues, resilient profitability, and accelerated expansion opportunities.
  
• Heavy investment, geographic concentration, and reliance on key crops heighten exposure to climate risks, regulatory pressures, competition, and margin compression.

Catalysts

Operates in the agribusiness sector in Brazil.

• While analyst consensus views geographic expansion and new facilities as incremental revenue drivers, these projections likely understate the breakout potential: Três Tentos has achieved record harvest origination, rapid ramp-up of stores, and is already tracking ahead of schedule in maturing new markets, which could turbocharge both sales volumes and margins well beyond "base case" forecasts as operational leverage in new regions kicks in.
  
• Analyst consensus assigns upside to new ethanol capacity and renewable energy demand, but B15 and E30 mandates, plus first-mover scale in corn ethanol and integrated co-products like DDG and corn oil, could create a step-change in recurring, higher-margin industrial revenues and position Três Tentos as a dominant biofuels supplier as Brazil's decarbonization accelerates-much stronger than current earnings models assume.
  
• Três Tentos' deep, trust-based customer relationships and exceptional retention-even as competitors exit and industry cycles bite-enable the company to continually gain market share in both inputs and origination, with differentiated farmer loyalty and proprietary data access that supports durable pricing power and resilient, above-peer net margins.
  
• Ongoing investment in proprietary digital platforms, coupled with hands-on precision agronomy teams, leaves Três Tentos uniquely positioned to capture the full benefit of digitalization and precision farming trends sweeping Brazil, enabling rapid service growth, reduced customer churn, and the ability to expand share-of-wallet with a recurring revenue profile.
  
• With a robust balance sheet, industry-low delinquency, and proven cash generation through multiple cycles, Três Tentos is primed to take advantage of agribusiness consolidation, selectively acquiring distressed assets or expanding store footprints at attractive returns, unlocking both scale efficiencies and accretive earnings growth.

Três Tentos Agroindustrial S/A Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Três Tentos Agroindustrial S/A compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Três Tentos Agroindustrial S/A's revenue will grow by 27.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 5.8% today to 4.9% in 3 years time.
• The bullish analysts expect earnings to reach R$1.4 billion (and earnings per share of R$2.79) by about August 2028, up from R$793.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 14.7x on those 2028 earnings, up from 9.0x today. This future PE is greater than the current PE for the BR Food industry at 10.2x.
• Analysts expect the number of shares outstanding to grow by 0.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 17.8%, as per the Simply Wall St company report.

Três Tentos Agroindustrial S/A Future Earnings Per Share Growth

Risks

• Três Tentos' heavy investments in new crushing and ethanol facilities significantly increase fixed costs, which could constrain net margins if commodity prices decline or demand falters during cyclical downturns over the next several years.
  
• The company remains highly concentrated in Brazil's southern and central regions, exposing revenue and earnings to increasing climate volatility, localized droughts, and other regional disruptions driven by long-term water scarcity and weather instability.
  
• As global consumers and regulators push more forcefully for lower-emission supply chains and crack down on deforestation, Três Tentos could face escalating compliance costs and possible restrictions on major export markets, putting sustained pressure on revenues and margins.
  
• Despite current growth, Três Tentos remains heavily exposed to soybeans and corn, which leaves it vulnerable to shifts in global demand, the rise of plant-based/organic food alternatives, and outbreaks of crop disease or pests, with potential negative impacts on both revenue resilience and earnings stability.
  
• Intensifying competition from more efficient global producers and ongoing input price inflation for seeds, fertilizers, and agrochemicals threaten to compress margins in the long term, eroding profitability even if topline volumes continue to increase.

Valuation

• The assumed bullish price target for Três Tentos Agroindustrial S/A is R$24.98, which represents two standard deviations above the consensus price target of R$20.01. This valuation is based on what can be assumed as the expectations of Três Tentos Agroindustrial S/A's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of R$26.0, and the most bearish reporting a price target of just R$18.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be R$28.5 billion, earnings will come to R$1.4 billion, and it would be trading on a PE ratio of 14.7x, assuming you use a discount rate of 17.8%.
  
• Given the current share price of R$14.23, the bullish analyst price target of R$24.98 is 43.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.