Cielo S.A. (BVMF:CIEL3) Just Reported First-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?

The quarterly results for Cielo S.A. (BVMF:CIEL3) were released last week, making it a good time to revisit its performance. Cielo reported R$2.6b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of R$0.19 beat expectations, being 4.7% higher than what the analysts expected. 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. 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 Cielo

Taking into account the latest results, the most recent consensus for Cielo from six analysts is for revenues of R$11.2b in 2024. If met, it would imply a satisfactory 6.1% increase on its revenue over the past 12 months. Statutory earnings per share are expected to decrease 6.5% to R$0.74 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$11.0b and earnings per share (EPS) of R$0.72 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of R$5.55, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. Currently, the most bullish analyst values Cielo at R$6.00 per share, while the most bearish prices it at R$4.80. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Cielo is forecast to grow faster in the future than it has in the past, with revenues expected to display 8.2% annualised growth until the end of 2024. If achieved, this would be a much better result than the 1.7% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 3.0% per year. So it looks like Cielo is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Cielo's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at R$5.55, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Cielo. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Cielo going out to 2026, and you can see them free on our platform here..

Even so, be aware that Cielo is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

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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.