TIM S.A. Just Missed EPS By 24%: Here's What Analysts Think Will Happen Next

Last week saw the newest quarterly earnings release from TIM S.A. (BVMF:TIMS3), an important milestone in the company's journey to build a stronger business. Statutory earnings per share fell badly short of expectations, coming in at R$0.11, some 24% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at R$4.3b. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for TIM

After the latest results, the eleven analysts covering TIM are now predicting revenues of R$18.1b in 2021. If met, this would reflect a credible 3.8% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 30% to R$0.99. Before this earnings report, the analysts had been forecasting revenues of R$18.1b and earnings per share (EPS) of R$0.98 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of R$19.50, showing that the business is executing well and in line with expectations. 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. The most optimistic TIM analyst has a price target of R$22.00 per share, while the most pessimistic values it at R$14.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. One thing stands out from these estimates, which is that TIM is forecast to grow faster in the future than it has in the past, with revenues expected to display 5.1% annualised growth until the end of 2021. If achieved, this would be a much better result than the 0.05% annual decline over the past year. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.4% annually. Not only are TIM's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. 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. The consensus price target held steady at R$19.50, 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 TIM. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for TIM going out to 2025, and you can see them free on our platform here..

You still need to take note of risks, for example - TIM has 1 warning sign we think you should be aware of.

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