Localiza Rent a Car S.A. (BVMF:RENT3) Just Released Its Second-Quarter Earnings: Here's What Analysts Think

It's been a sad week for Localiza Rent a Car S.A. (BVMF:RENT3), who've watched their investment drop 20% to R$39.20 in the week since the company reported its second-quarter result. It was an okay report, and revenues came in at R$9.0b, approximately in line with analyst estimates leading up to the results announcement. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Localiza Rent a Car

After the latest results, the twelve analysts covering Localiza Rent a Car are now predicting revenues of R$38.0b in 2024. If met, this would reflect a decent 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 110% to R$3.05. Before this earnings report, the analysts had been forecasting revenues of R$37.3b and earnings per share (EPS) of R$3.04 in 2024. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small lift in to revenue forecasts.

Even though revenue forecasts increased, there was no change to the consensus price target of R$65.54, suggesting the analysts are focused on earnings as the driver of value creation. 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 Localiza Rent a Car, with the most bullish analyst valuing it at R$89.00 and the most bearish at R$50.00 per share. 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.

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. We can infer from the latest estimates that forecasts expect a continuation of Localiza Rent a Car'shistorical trends, as the 33% annualised revenue growth to the end of 2024 is roughly in line with the 29% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 13% annually. So although Localiza Rent a Car is expected to maintain its revenue growth rate, it's definitely expected 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. Happily, they also upgraded their revenue estimates, and are forecasting them 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Localiza Rent a Car. Long-term earnings power is much more important than next year's profits. We have forecasts for Localiza Rent a Car going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for Localiza Rent a Car you should be aware of, and 1 of them is potentially serious.

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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.