Instituto Hermes Pardini S.A. Just Beat Revenue By 6.5%: Here's What Analysts Think Will Happen Next

It's been a good week for Instituto Hermes Pardini S.A. (BVMF:PARD3) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.1% to R$22.87. It was a workmanlike result, with revenues of R$449m coming in 6.5% ahead of expectations, and statutory earnings per share of R$0.47, in line with analyst appraisals. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Instituto Hermes Pardini

Taking into account the latest results, the most recent consensus for Instituto Hermes Pardini from four analysts is for revenues of R$1.55b in 2021 which, if met, would be a solid 15% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 34% to R$1.32. In the lead-up to this report, the analysts had been modelling revenues of R$1.47b and earnings per share (EPS) of R$1.24 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of R$27.75, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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. There are some variant perceptions on Instituto Hermes Pardini, with the most bullish analyst valuing it at R$32.00 and the most bearish at R$24.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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 Instituto Hermes Pardini's rate of growth is expected to accelerate meaningfully, with the forecast 15% revenue growth noticeably faster than its historical growth of 11%p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 13% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Instituto Hermes Pardini is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Instituto Hermes Pardini's earnings potential next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target held steady at R$27.75, 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 Instituto Hermes Pardini. Long-term earnings power is much more important than next year's profits. We have forecasts for Instituto Hermes Pardini going out to 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Instituto Hermes Pardini you should be aware of.

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