Grupo de Moda SOMA S.A. Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

Last week, you might have seen that Grupo de Moda SOMA S.A. (BVMF:SOMA3) released its quarterly result to the market. The early response was not positive, with shares down 7.0% to R$13.63 in the past week. It was a curious result overall, with revenues coming in an incredible 31% below what the analysts had expected, at R$726m. Statutory earnings per share beat analyst models by 74% to hit R$0.24. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Our analysis indicates that SOMA3 is potentially overvalued!

Taking into account the latest results, the most recent consensus for Grupo de Moda SOMA from seven analysts is for revenues of R$4.89b in 2022 which, if met, would be a decent 18% increase on its sales over the past 12 months. Statutory earnings per share are predicted to rise 5.5% to R$0.51. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$4.90b and earnings per share (EPS) of R$0.52 in 2022. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at R$16.90, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Grupo de Moda SOMA, with the most bullish analyst valuing it at R$19.00 and the most bearish at R$13.50 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Grupo de Moda SOMA's revenue growth is expected to slow, with the forecast 38% annualised growth rate until the end of 2022 being well below the historical 156% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% per year. Even after the forecast slowdown in growth, it seems obvious that Grupo de Moda SOMA is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Grupo de Moda SOMA going out to 2024, and you can see them free on our platform here..

It might also be worth considering whether Grupo de Moda SOMA's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, 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.