Earnings Beat: Rede D'Or São Luiz S.A. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

A week ago, Rede D'Or São Luiz S.A. (BVMF:RDOR3) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. The company beat forecasts, with revenue of R$13b, some 2.5% above estimates, and statutory earnings per share (EPS) coming in at R$0.43, 32% ahead of 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Rede D'Or São Luiz

Taking into account the latest results, the most recent consensus for Rede D'Or São Luiz from nine analysts is for revenues of R$53.3b in 2024. If met, it would imply a notable 10% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 8.9% to R$1.51. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$53.1b and earnings per share (EPS) of R$1.41 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of R$37.14, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Rede D'Or São Luiz at R$42.00 per share, while the most bearish prices it at R$33.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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 Rede D'Or São Luiz's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 22% growth on an annualised basis. This is compared to a historical growth rate of 31% 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) 9.8% per year. Even after the forecast slowdown in growth, it seems obvious that Rede D'Or São Luiz is also expected 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 Rede D'Or São Luiz following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at R$37.14, 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. At Simply Wall St, we have a full range of analyst estimates for Rede D'Or São Luiz going out to 2026, and you can see them free on our platform here..

You can also view our analysis of Rede D'Or São Luiz's balance sheet, and whether we think Rede D'Or São Luiz is carrying too much debt, for free on our platform here.

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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.