Analysts Just Made A Huge Upgrade To Their Irani Papel e Embalagem S.A. (BVMF:RANI3) Forecasts

By
Simply Wall St
Published
May 30, 2021
BOVESPA:RANI3
Source: Shutterstock

Celebrations may be in order for Irani Papel e Embalagem S.A. (BVMF:RANI3) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The market may be pricing in some blue sky too, with the share price gaining 11% to R$8.31 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After the upgrade, the two analysts covering Irani Papel e Embalagem are now predicting revenues of R$1.3b in 2021. If met, this would reflect a decent 10% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 88% to R$0.97. Prior to this update, the analysts had been forecasting revenues of R$1.1b and earnings per share (EPS) of R$0.55 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for Irani Papel e Embalagem

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BOVESPA:RANI3 Earnings and Revenue Growth May 31st 2021

With these upgrades, we're not surprised to see that the analysts have lifted their price target 8.7% to R$8.37 per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Irani Papel e Embalagem, with the most bullish analyst valuing it at R$10.10 and the most bearish at R$7.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Irani Papel e Embalagem shareholders.

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. The analysts are definitely expecting Irani Papel e Embalagem's growth to accelerate, with the forecast 14% annualised growth to the end of 2021 ranking favourably alongside historical growth of 7.1% per annum 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 4.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Irani Papel e Embalagem is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Irani Papel e Embalagem.

Analysts are definitely bullish on Irani Papel e Embalagem, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including major dilution from new stock issuance in the past year. You can learn more, and discover the 4 other risks we've identified, for free on our platform here.

You can also see our analysis of Irani Papel e Embalagem's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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