Earnings Beat: Tupy S.A. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Last week saw the newest first-quarter earnings release from Tupy S.A. (BVMF:TUPY3), an important milestone in the company's journey to build a stronger business. Revenues were R$1.1b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at R$1.93, an impressive 20% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Tupy

After the latest results, the consensus from Tupy's five analysts is for revenues of R$4.03b in 2020, which would reflect an uneasy 19% decline in sales compared to the last year of performance. Earnings are expected to improve, with Tupy forecast to report a statutory profit of R$0.88 per share. In the lead-up to this report, the analysts had been modelling revenues of R$4.41b and earnings per share (EPS) of R$1.20 in 2020. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.

The analysts made no major changes to their price target of R$24.13, suggesting the downgrades are not expected to have a long-term impact on Tupy'svaluation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Tupy analyst has a price target of R$30.00 per share, while the most pessimistic values it at R$18.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Tupy's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 19% revenue decline a notable change from historical growth of 12% 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 7.1% next year. It's pretty clear that Tupy'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 Tupy. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Tupy. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Tupy analysts - going out to 2023, and you can see them free on our platform here.

Even so, be aware that Tupy is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...

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