Localiza Rent a Car S.A. (BVMF:RENT3) Just Released Its Full-Year Results And Analysts Are Updating Their Estimates

As you might know, Localiza Rent a Car S.A. (BVMF:RENT3) recently reported its annual numbers. Revenues were R$29b, with Localiza Rent a Car reporting some 2.2% below analyst expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Localiza Rent a Car

After the latest results, the nine analysts covering Localiza Rent a Car are now predicting revenues of R$38.9b in 2024. If met, this would reflect a huge 35% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 95% to R$3.33. Before this earnings report, the analysts had been forecasting revenues of R$39.2b and earnings per share (EPS) of R$3.67 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at R$75.51, 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 Localiza Rent a Car analyst has a price target of R$90.00 per share, while the most pessimistic values it at R$58.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Localiza Rent a Car's rate of growth is expected to accelerate meaningfully, with the forecast 35% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 26% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 17% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Localiza Rent a Car to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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$75.51, with the latest estimates not enough to have an impact on their price targets.

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. At Simply Wall St, we have a full range of analyst estimates for Localiza Rent a Car going out to 2026, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 5 warning signs for Localiza Rent a Car (2 are significant!) that you need to be mindful 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.