Stock Analysis

EZTEC Empreendimentos e Participações S.A. Just Missed Earnings - But Analysts Have Updated Their Models

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Shareholders might have noticed that EZTEC Empreendimentos e Participações S.A. (BVMF:EZTC3) filed its annual result this time last week. The early response was not positive, with shares down 2.5% to R$13.31 in the past week. Statutory earnings per share of R$1.48 unfortunately missed expectations by 11%, although it was encouraging to see revenues of R$1.1b exceed expectations by 4.3%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on EZTEC Empreendimentos e Participações after the latest results.

Check out our latest analysis for EZTEC Empreendimentos e Participações

BOVESPA:EZTC3 Earnings and Revenue Growth March 19th 2023

After the latest results, the eight analysts covering EZTEC Empreendimentos e Participações are now predicting revenues of R$1.32b in 2023. If met, this would reflect a meaningful 18% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 52% to R$2.27. In the lead-up to this report, the analysts had been modelling revenues of R$1.24b and earnings per share (EPS) of R$1.86 in 2023. So it seems there's been a definite increase in optimism about EZTEC Empreendimentos e Participações' future following the latest results, with a great increase in the earnings per share forecasts in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of R$19.68, 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. There are some variant perceptions on EZTEC Empreendimentos e Participações, with the most bullish analyst valuing it at R$30.00 and the most bearish at R$13.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that EZTEC Empreendimentos e Participações' rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 10% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that EZTEC Empreendimentos e Participações is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around EZTEC Empreendimentos e Participações' earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at R$19.68, with the latest estimates not enough to have an impact on their price targets.

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 EZTEC Empreendimentos e Participações going out to 2024, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for EZTEC Empreendimentos e Participações that you should be aware of.

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