The Locaweb Serviços de Internet S.A. (BVMF:LWSA3) Full-Year Results Are Out And Analysts Have Published New Forecasts

It's been a good week for Locaweb Serviços de Internet S.A. (BVMF:LWSA3) shareholders, because the company has just released its latest annual results, and the shares gained 3.0% to R$5.83. It was a pretty bad result overall; while revenues were in line with expectations at R$1.3b, statutory losses exploded to R$0.13 per share. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Locaweb Serviços de Internet

Taking into account the latest results, the current consensus from Locaweb Serviços de Internet's seven analysts is for revenues of R$1.48b in 2024. This would reflect a decent 15% increase on its revenue over the past 12 months. Earnings are expected to improve, with Locaweb Serviços de Internet forecast to report a statutory profit of R$0.13 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$1.47b and earnings per share (EPS) of R$0.14 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at R$8.08, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. The most optimistic Locaweb Serviços de Internet analyst has a price target of R$11.00 per share, while the most pessimistic values it at R$5.00. 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.

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 Locaweb Serviços de Internet's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 15% 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) 8.8% per year. Even after the forecast slowdown in growth, it seems obvious that Locaweb Serviços de Internet is also expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Locaweb Serviços de Internet. 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$8.08, 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 Locaweb Serviços de Internet. Long-term earnings power is much more important than next year's profits. We have forecasts for Locaweb Serviços de Internet going out to 2025, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Locaweb Serviços de Internet that you should be aware of.

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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.