JBS S.A. Just Beat EPS By 20%: Here's What Analysts Think Will Happen Next

Last week, you might have seen that JBS S.A. (BVMF:JBSS3) released its second-quarter result to the market. The early response was not positive, with shares down 2.1% to R$30.42 in the past week. Revenues were R$92b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at R$1.78, an impressive 20% ahead of estimates. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for JBS

Following last week's earnings report, JBS' ten analysts are forecasting 2022 revenues to be R$377.2b, approximately in line with the last 12 months. Statutory earnings per share are forecast to dive 40% to R$6.29 in the same period. Before this earnings report, the analysts had been forecasting revenues of R$364.7b and earnings per share (EPS) of R$6.59 in 2022. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a to revenue, the consensus also made a small dip in its earnings per share forecasts.

The consensus price target was unchanged at R$53.57, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic JBS analyst has a price target of R$78.00 per share, while the most pessimistic values it at R$34.00. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that JBS' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 2.3% growth on an annualised basis. This is compared to a historical growth rate of 19% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 3.8% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than JBS.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for JBS. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at R$53.57, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for JBS going out to 2024, 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 3 warning signs for JBS (1 is significant!) 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.