Marfrig Global Foods S.A. (BVMF:MRFG3) Just Released Its Second-Quarter Results And Analysts Are Updating Their Estimates

Investors in Marfrig Global Foods S.A. (BVMF:MRFG3) had a good week, as its shares rose 3.3% to close at R$19.45 following the release of its quarterly results. Revenues were R$21b, with Marfrig Global Foods reporting some 3.7% below analyst expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Marfrig Global Foods

Taking into account the latest results, Marfrig Global Foods' ten analysts currently expect revenues in 2021 to be R$72.5b, approximately in line with the last 12 months. Statutory earnings per share are expected to drop 16% to R$4.65 in the same period. Before this earnings report, the analysts had been forecasting revenues of R$73.2b and earnings per share (EPS) of R$3.68 in 2021. Although the revenue estimates have not really changed, we can see there's been a considerable lift to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

There's been no major changes to the consensus price target of R$23.25, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock'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. Currently, the most bullish analyst values Marfrig Global Foods at R$31.00 per share, while the most bearish prices it at R$17.00. 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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 1.1% by the end of 2021. This indicates a significant reduction from annual growth of 37% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.7% annually for the foreseeable future. It's pretty clear that Marfrig Global Foods' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Marfrig Global Foods following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Marfrig Global Foods' revenues are expected to perform worse than the wider industry. The consensus price target held steady at R$23.25, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that 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 Marfrig Global Foods going out to 2023, and you can see them free on our platform here..

Even so, be aware that Marfrig Global Foods is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...

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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.
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