Grupo de Moda Soma S.A. Just Missed Earnings With A Surprise Loss - Here Are Analysts Latest Forecasts

Last week saw the newest full-year earnings release from Grupo de Moda Soma S.A. (BVMF:SOMA3), an important milestone in the company's journey to build a stronger business. Revenues came in at R$5.4b, in line with estimates, while Grupo de Moda Soma reported a statutory loss of R$2.06 per share, well short of prior analyst forecasts for a profit. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Grupo de Moda Soma

Taking into account the latest results, the current consensus from Grupo de Moda Soma's nine analysts is for revenues of R$5.86b in 2024. This would reflect a decent 9.4% increase on its revenue over the past 12 months. Earnings are expected to improve, with Grupo de Moda Soma forecast to report a statutory profit of R$0.49 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$5.93b and earnings per share (EPS) of R$0.51 in 2024. 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$9.80, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Grupo de Moda Soma analyst has a price target of R$12.00 per share, while the most pessimistic values it at R$7.90. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Grupo de Moda Soma's revenue growth is expected to slow, with the forecast 9.4% annualised growth rate until the end of 2024 being well below the historical 39% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% annually. Factoring in the forecast slowdown in growth, it looks like Grupo de Moda Soma is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Grupo de Moda Soma. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Grupo de Moda Soma. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Grupo de Moda Soma analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Grupo de Moda Soma that you should be aware of.

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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.