Ultrapar Participações S.A. Just Missed EPS By 8.1%: Here's What Analysts Think Will Happen Next

The second-quarter results for Ultrapar Participações S.A. (BVMF:UGPA3) were released last week, making it a good time to revisit its performance. It looks like the results were a bit of a negative overall. While revenues of R$32b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 8.1% to hit R$0.39 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Ultrapar Participações after the latest results.

See our latest analysis for Ultrapar Participações

Following the latest results, Ultrapar Participações' eleven analysts are now forecasting revenues of R$131.5b in 2024. This would be a reasonable 2.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to plummet 30% to R$1.81 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$131.9b and earnings per share (EPS) of R$1.93 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at R$27.52, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. Currently, the most bullish analyst values Ultrapar Participações at R$35.00 per share, while the most bearish prices it at R$20.00. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Ultrapar Participações' past performance and to peers in the same industry. We would highlight that Ultrapar Participações' revenue growth is expected to slow, with the forecast 4.4% annualised growth rate until the end of 2024 being well below the historical 12% 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) 3.9% annually. Factoring in the forecast slowdown in growth, it looks like Ultrapar Participações 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 Ultrapar Participações. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at R$27.52, 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 Ultrapar Participações. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Ultrapar Participações analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Ultrapar Participações (1 shouldn't be ignored!) 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.