Fras-le S.A. (BVMF:FRAS3) Just Reported And Analysts Have Been Lifting Their Price Targets

It's been a good week for Fras-le S.A. (BVMF:FRAS3) shareholders, because the company has just released its latest yearly results, and the shares gained 2.1% to R$13.59. It was a workmanlike result, with revenues of R$2.6b coming in 2.8% ahead of expectations, and statutory earnings per share of R$0.98, in line with analyst appraisals. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Fras-le

After the latest results, the three analysts covering Fras-le are now predicting revenues of R$2.90b in 2022. If met, this would reflect a solid 12% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to reduce 8.6% to R$0.90 in the same period. In the lead-up to this report, the analysts had been modelling revenues of R$2.74b and earnings per share (EPS) of R$0.89 in 2022. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small increase to to revenue forecasts.

The analysts increased their price target 11% to R$18.12, perhaps signalling that higher revenues are a strong leading indicator for Fras-le's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Fras-le, with the most bullish analyst valuing it at R$20.00 and the most bearish at R$16.47 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. It's pretty clear that there is an expectation that Fras-le's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 12% growth on an annualised basis. This is compared to a historical growth rate of 25% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.4% per year. Even after the forecast slowdown in growth, it seems obvious that Fras-le is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Fras-le. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Fras-le going out to 2024, and you can see them free on our platform here..

You still need to take note of risks, for example - Fras-le has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.