Dotz S.A. (BVMF:DOTZ3) Annual Results: Here's What Analysts Are Forecasting For This Year

It's shaping up to be a tough period for Dotz S.A. (BVMF:DOTZ3), which a week ago released some disappointing annual results that could have a notable impact on how the market views the stock. Unfortunately, Dotz delivered a serious earnings miss. Revenues of R$115m were 16% below expectations, and statutory losses ballooned 43% to R$0.62 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Dotz

Taking into account the latest results, the most recent consensus for Dotz from three analysts is for revenues of R$215.4m in 2022 which, if met, would be a major 88% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 96% to R$0.016. Yet prior to the latest earnings, the analysts had been forecasting revenues of R$216.0m and losses of R$0.0071 per share in 2022. While this year's revenue estimates held steady, there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The consensus price target held steady at R$16.25, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Dotz analyst has a price target of R$22.00 per share, while the most pessimistic values it at R$8.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. For example, we noticed that Dotz's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 88% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 5.4% a year over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 13% per year. So it looks like Dotz is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Dotz analysts - going out to 2023, and you can see them free on our platform here.

Even so, be aware that Dotz is showing 3 warning signs in our investment analysis , and 1 of those is concerning...

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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.