TOTVS S.A. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

It's been a mediocre week for TOTVS S.A. (BVMF:TOTS3) shareholders, with the stock dropping 15% to R$27.25 in the week since its latest quarterly results. Sales of R$981m surpassed estimates by 3.8%, although statutory earnings per share missed badly, coming in 30% below expectations at R$0.13 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for TOTVS

Taking into account the latest results, the consensus forecast from TOTVS' eleven analysts is for revenues of R$3.94b in 2022, which would reflect a meaningful 12% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 48% to R$0.89. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$4.01b and earnings per share (EPS) of R$0.87 in 2022. So the consensus seems to have become somewhat more optimistic on TOTVS' earnings potential following these results.

The consensus price target was unchanged at R$39.77, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic TOTVS analyst has a price target of R$45.00 per share, while the most pessimistic values it at R$30.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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 TOTVS' growth to accelerate, with the forecast 16% annualised growth to the end of 2022 ranking favourably alongside historical growth of 8.8% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 14% per year. TOTVS 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 most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards TOTVS following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at R$39.77, 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 TOTVS going out to 2024, and you can see them free on our platform here..

Plus, you should also learn about the 2 warning signs we've spotted with TOTVS .

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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.