Results: Ambev S.A. Exceeded Expectations And The Consensus Has Updated Its Estimates

Ambev S.A. (BVMF:ABEV3) shareholders are probably feeling a little disappointed, since its shares fell 2.7% to R$12.04 in the week after its latest first-quarter results. Ambev reported R$20b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of R$0.23 beat expectations, being 6.9% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Ambev

After the latest results, the 15 analysts covering Ambev are now predicting revenues of R$84.5b in 2024. If met, this would reflect a credible 6.3% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be R$0.92, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of R$84.4b and earnings per share (EPS) of R$0.92 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of R$15.78, showing that the business is executing well and in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Ambev at R$19.00 per share, while the most bearish prices it at R$12.45. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Ambev shareholders.

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 Ambev's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 8.5% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.0% annually. Factoring in the forecast slowdown in growth, it looks like Ambev is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Ambev. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Ambev analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Ambev that you need to be mindful 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.