Investors in SLC Agrícola S.A. (BVMF:SLCE3) had a good week, as its shares rose 2.5% to close at R$41.05 following the release of its third-quarter results. Revenues were R$751m, 26% shy of what the analysts were expecting, although statutory earnings of R$1.65 per share were roughly in line with what was forecast. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, SLC Agrícola's seven analysts are now forecasting revenues of R$4.48b in 2021. This would be a sizeable 61% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 122% to R$4.62. Before this earnings report, the analysts had been forecasting revenues of R$3.79b and earnings per share (EPS) of R$3.02 in 2021. There has definitely been an improvement in perception after these results, with the analysts noticeably increasing both their earnings and revenue estimates.
It will come as no surprise to learn that the analysts have increased their price target for SLC Agrícola 8.1% to R$39.93on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic SLC Agrícola analyst has a price target of R$51.00 per share, while the most pessimistic values it at R$27.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that SLC Agrícola's rate of growth is expected to accelerate meaningfully, with the forecast 46% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 12% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect SLC Agrícola to grow faster 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 SLC Agrícola following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for SLC Agrícola going out to 2023, and you can see them free on our platform here..
Even so, be aware that SLC Agrícola is showing 3 warning signs in our investment analysis , you should know about...
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