Analysts Are Updating Their Dexco S.A. (BVMF:DXCO3) Estimates After Its Second-Quarter Results

Shareholders of Dexco S.A. (BVMF:DXCO3) will be pleased this week, given that the stock price is up 12% to R$8.05 following its latest second-quarter results. Dexco reported in line with analyst predictions, delivering revenues of R$2.0b and statutory earnings per share of R$0.12, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Dexco

Taking into account the latest results, the most recent consensus for Dexco from eight analysts is for revenues of R$7.83b in 2024. If met, it would imply a reasonable 2.3% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to plunge 41% to R$0.39 in the same period. Before this earnings report, the analysts had been forecasting revenues of R$7.79b and earnings per share (EPS) of R$0.41 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at R$9.79, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Dexco at R$11.00 per share, while the most bearish prices it at R$9.00. This is a very narrow spread of estimates, implying either that Dexco is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Dexco's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.7% growth on an annualised basis. This is compared to a historical growth rate of 10% 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 6.4% 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 Dexco.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at R$9.79, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Dexco going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 3 warning signs for Dexco (of which 1 can't be ignored!) you should know about.

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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.