WEG S.A. Just Recorded A 15% EPS Beat: Here's What Analysts Are Forecasting Next

Shareholders of WEG S.A. (BVMF:WEGE3) will be pleased this week, given that the stock price is up 13% to R$52.84 following its latest second-quarter results. Revenues were R$9.3b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of R$0.34 were also better than expected, beating analyst predictions by 15%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for WEG

Taking into account the latest results, the consensus forecast from WEG's 13 analysts is for revenues of R$37.1b in 2024. This reflects a meaningful 9.4% improvement in revenue compared to the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of R$37.1b and earnings per share (EPS) of R$1.31 in 2024. Overall, while the analysts have reconfirmed their revenue estimates, the consensus now no longer provides an EPS estimate. This implies that the market believes revenue is more important after these latest results.

Additionally, the consensus price target for WEG rose 6.9% to R$49.20, showing a clear increase in optimism from the the analysts involved. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values WEG at R$60.00 per share, while the most bearish prices it at R$39.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 20% growth on an annualised basis. That is in line with its 21% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 12% annually. So it's pretty clear that WEG is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their revenue estimates for next year, suggesting that the business is performing in line with expectations. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue 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.

We have estimates for WEG from its 13 analysts out to 2026, and you can see them free on our platform here.

We also provide an overview of the WEG Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com