WEG S.A. Just Recorded A 7.7% EPS Beat: Here's What Analysts Are Forecasting Next

Investors in WEG S.A. (BVMF:WEGE3) had a good week, as its shares rose 7.7% to close at R$35.98 following the release of its annual results. The result was positive overall - although revenues of R$33b were in line with what the analysts predicted, WEG surprised by delivering a statutory profit of R$1.37 per share, modestly greater than expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for WEG

Following the latest results, WEG's eleven analysts are now forecasting revenues of R$37.9b in 2024. This would be a meaningful 17% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to shrink 4.5% to R$1.30 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$38.0b and earnings per share (EPS) of R$1.30 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at R$41.80. 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$50.00 per share, while the most bearish prices it at R$38.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the WEG's past performance and to peers in the same industry. It's pretty clear that there is an expectation that WEG's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 17% growth on an annualised basis. This is compared to a historical growth rate of 22% 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) 12% per year. So it's pretty clear that, while WEG's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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. 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. The consensus price target held steady at R$41.80, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple WEG analysts - going out to 2026, and you can see them free on our platform here.

You can also see our analysis of WEG's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.