Stock Analysis

Results: Petroreconcavo S.A. Beat Earnings Expectations And Analysts Now Have New Forecasts

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Shareholders might have noticed that Petroreconcavo S.A. (BVMF:RECV3) filed its full-year result this time last week. The early response was not positive, with shares down 3.9% to R$20.46 in the past week. It looks like a credible result overall - although revenues of R$3.0b were in line with what the analysts predicted, Petroreconcavo surprised by delivering a statutory profit of R$4.22 per share, a notable 11% above expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Petroreconcavo

BOVESPA:RECV3 Earnings and Revenue Growth March 25th 2023

Following the latest results, Petroreconcavo's seven analysts are now forecasting revenues of R$3.65b in 2023. This would be a major 23% improvement in sales compared to the last 12 months. Before this earnings report, the analysts had been forecasting revenues of R$3.86b and earnings per share (EPS) of R$7.23 in 2023. So we can see that while the consensus made a small dip in revenue estimates, it no longer provides an earnings per share estimate, suggesting that the market is now more focused on revenue after the latest result.

We'd also point out that thatthe analysts have made no major changes to their price target of R$35.69. 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. There are some variant perceptions on Petroreconcavo, with the most bullish analyst valuing it at R$45.00 and the most bearish at R$28.80 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. It's pretty clear that there is an expectation that Petroreconcavo's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 23% growth on an annualised basis. This is compared to a historical growth rate of 40% over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 2.7% per year. So it's clear that despite the slowdown in growth, Petroreconcavo is still expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their revenue estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.

At least one of Petroreconcavo's seven analysts has provided estimates out to 2025, which can be seen for free on our platform here.

Before you take the next step you should know about the 4 warning signs for Petroreconcavo (1 can't be ignored!) that we have uncovered.

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