JSL S.A. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

JSL S.A. (BVMF:JSLG3) just released its second-quarter report and things are looking bullish. JSL beat earnings, with revenues hitting R$1.4b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 12%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for JSL

Taking into account the latest results, the current consensus from JSL's six analysts is for revenues of R$5.53b in 2022, which would reflect a satisfactory 5.5% increase on its sales over the past 12 months. Per-share earnings are expected to climb 16% to R$0.81. Before this earnings report, the analysts had been forecasting revenues of R$5.30b and earnings per share (EPS) of R$0.84 in 2022. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a satisfactory to revenue, the consensus also made a small dip in its earnings per share forecasts.

The analysts also cut JSL's price target 9.0% to R$12.29, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in sales. 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. There are some variant perceptions on JSL, with the most bullish analyst valuing it at R$16.00 and the most bearish at R$9.00 per share. 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 JSL is forecast to grow faster in the future than it has in the past, with revenues expected to display 11% annualised growth until the end of 2022. If achieved, this would be a much better result than the 19% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 30% annually for the foreseeable future. So although JSL's revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for JSL. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of JSL's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for JSL going out to 2024, and you can see them free on our platform here.

Even so, be aware that JSL is showing 4 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

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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.