Grupo SBF S.A. Just Missed EPS By 46%: Here's What Analysts Think Will Happen Next

The analysts might have been a bit too bullish on Grupo SBF S.A. (BVMF:CNTO3), given that the company fell short of expectations when it released its first-quarter results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at R$506m, statutory earnings missed forecasts by an incredible 46%, coming in at just R$0.04 per share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Grupo SBF

Taking into account the latest results, the three analysts covering Grupo SBF provided consensus estimates of R$2.33b revenue in 2020, which would reflect a perceptible 7.5% decline on its sales over the past 12 months. Statutory earnings per share are expected to nosedive 87% to R$0.20 in the same period. Before this earnings report, the analysts had been forecasting revenues of R$2.45b and earnings per share (EPS) of R$0.42 in 2020. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the R$32.30 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. Currently, the most bullish analyst values Grupo SBF at R$49.00 per share, while the most bearish prices it at R$19.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with the forecast 7.5% revenue decline a notable change from historical growth of 7.8% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.3% annually for the foreseeable future. It's pretty clear that Grupo SBF's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Grupo SBF. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at R$32.30, 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 Grupo SBF analysts - going out to 2022, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for Grupo SBF you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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