Earnings Update: Iguatemi S.A. (BVMF:IGTI3) Just Reported Its First-Quarter Results And Analysts Are Updating Their Forecasts

Last week, you might have seen that Iguatemi S.A. (BVMF:IGTI3) released its quarterly result to the market. The early response was not positive, with shares down 8.3% to R$2.43 in the past week. Results overall were respectable, with statutory earnings of R$0.20 per share roughly in line with what the analysts had forecast. Revenues of R$226m came in 3.9% ahead of analyst predictions. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Iguatemi

Taking into account the latest results, the current consensus from Iguatemi's nine analysts is for revenues of R$995.9m in 2022, which would reflect a decent 8.6% increase on its sales over the past 12 months. Per-share earnings are expected to surge 251% to R$0.63. In the lead-up to this report, the analysts had been modelling revenues of R$980.2m and earnings per share (EPS) of R$0.72 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at R$27.40, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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 Iguatemi, with the most bullish analyst valuing it at R$29.00 and the most bearish at R$25.00 per share. This is a very narrow spread of estimates, implying either that Iguatemi is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. The analysts are definitely expecting Iguatemi's growth to accelerate, with the forecast 12% annualised growth to the end of 2022 ranking favourably alongside historical growth of 3.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. Iguatemi is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Iguatemi. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at R$27.40, 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 Iguatemi. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Iguatemi analysts - 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 3 warning signs for Iguatemi you should be aware of, and 1 of them is potentially serious.

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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.