New Forecasts: Here's What Analysts Think The Future Holds For Petro Rio S.A. (BVMF:PRIO3)

Petro Rio S.A. (BVMF:PRIO3) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After this upgrade, Petro Rio's five analysts are now forecasting revenues of R$6.5b in 2022. This would be a sizeable 23% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to accumulate 3.6% to R$3.03. Prior to this update, the analysts had been forecasting revenues of R$5.1b and earnings per share (EPS) of R$2.13 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Petro Rio

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of R$37.93, 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 Petro Rio, with the most bullish analyst valuing it at R$47.00 and the most bearish at R$22.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. We would highlight that Petro Rio's revenue growth is expected to slow, with the forecast 32% annualised growth rate until the end of 2022 being well below the historical 47% p.a. growth over the last five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 0.2% annually. Factoring in the forecast slowdown in growth, it's pretty clear that Petro Rio is still expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Petro Rio could be a good candidate for more research.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Petro Rio going out to 2024, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.