Cruzeiro do Sul Educacional S.A. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

It's been a good week for Cruzeiro do Sul Educacional S.A. (BVMF:CSED3) shareholders, because the company has just released its latest first-quarter results, and the shares gained 5.7% to R$3.51. Statutory earnings per share fell badly short of expectations, coming in at R$0.01, some 90% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at R$473m. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Cruzeiro do Sul Educacional

Following the latest results, Cruzeiro do Sul Educacional's four analysts are now forecasting revenues of R$2.00b in 2022. This would be a reasonable 6.9% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 101% to R$0.37. Before this earnings report, the analysts had been forecasting revenues of R$1.99b and earnings per share (EPS) of R$0.57 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.

It might be a surprise to learn that the consensus price target fell 5.4% to R$10.60, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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. The most optimistic Cruzeiro do Sul Educacional analyst has a price target of R$19.00 per share, while the most pessimistic values it at R$7.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on 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 Cruzeiro do Sul Educacional's rate of growth is expected to accelerate meaningfully, with the forecast 9.3% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 3.8% over the past year. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 8.7% per year. Cruzeiro do Sul Educacional is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Cruzeiro do Sul Educacional. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Cruzeiro do Sul Educacional going out to 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Cruzeiro do Sul Educacional 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.