Rainbows and Unicorns: Orizon Valorização de Resíduos S.A. (BVMF:ORVR3) Analysts Just Became A Lot More Optimistic

Orizon Valorização de Resíduos S.A. (BVMF:ORVR3) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

Following the upgrade, the current consensus from Orizon Valorização de Resíduos' three analysts is for revenues of R$992m in 2023 which - if met - would reflect a substantial 65% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of R$1.84 per share next year. Previously, the analysts had been modelling revenues of R$863m and earnings per share (EPS) of R$1.54 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Orizon Valorização de Resíduos

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of R$41.96, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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 Orizon Valorização de Resíduos analyst has a price target of R$46.48 per share, while the most pessimistic values it at R$37.40. This is a very narrow spread of estimates, implying either that Orizon Valorização de Resíduos is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Orizon Valorização de Resíduos' rate of growth is expected to accelerate meaningfully, with the forecast 49% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 15% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 21% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Orizon Valorização de Resíduos to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to next year's earnings expectations, it might be time to take another look at Orizon Valorização de Resíduos.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Orizon Valorização de Resíduos going out to 2024, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.