Here's What Analysts Are Forecasting For Localiza Rent a Car S.A. (BVMF:RENT3) After Its First-Quarter Results

Shareholders might have noticed that Localiza Rent a Car S.A. (BVMF:RENT3) filed its first-quarter result this time last week. The early response was not positive, with shares down 4.8% to R$41.00 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at R$10b, statutory earnings beat expectations 4.6%, with Localiza Rent a Car reporting profits of R$0.79 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Our free stock report includes 2 warning signs investors should be aware of before investing in Localiza Rent a Car. Read for free now.

Taking into account the latest results, the consensus forecast from Localiza Rent a Car's twelve analysts is for revenues of R$42.9b in 2025. This reflects a decent 11% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 77% to R$3.23. In the lead-up to this report, the analysts had been modelling revenues of R$43.2b and earnings per share (EPS) of R$3.20 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

See our latest analysis for Localiza Rent a Car

The analysts reconfirmed their price target of R$49.78, showing that the business is executing well and in line with expectations. 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 Localiza Rent a Car analyst has a price target of R$59.00 per share, while the most pessimistic values it at R$39.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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 Localiza Rent a Car's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 32% 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) 10% per year. Even after the forecast slowdown in growth, it seems obvious that Localiza Rent a Car is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Localiza Rent a Car going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Localiza Rent a Car (at least 1 which is significant) , and understanding these should be part of your investment process.

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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.