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

Last week, you might have seen that Localiza Rent a Car S.A. (BVMF:RENT3) released its second-quarter result to the market. The early response was not positive, with shares down 2.4% to R$34.80 in the past week. It was an okay report, and revenues came in at R$9.9b, approximately in line with analyst estimates leading up to the results announcement. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, the consensus forecast from Localiza Rent a Car's 13 analysts is for revenues of R$41.4b in 2025. This reflects a satisfactory 4.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 42% to R$3.12. In the lead-up to this report, the analysts had been modelling revenues of R$41.8b and earnings per share (EPS) of R$3.19 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

See our latest analysis for Localiza Rent a Car

The consensus price target held steady at R$53.87, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Localiza Rent a Car, with the most bullish analyst valuing it at R$65.00 and the most bearish at R$39.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Localiza Rent a Car shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Localiza Rent a Car's past performance and to peers in the same industry. We would highlight that Localiza Rent a Car's revenue growth is expected to slow, with the forecast 9.7% annualised growth rate until the end of 2025 being well below the historical 32% p.a. growth over the last five years. Compare this to the 8 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 8.8% per year. So it's pretty clear that, while Localiza Rent a Car's revenue growth is expected to slow, it's expected to grow roughly in line with 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 Localiza Rent a Car. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall 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.

Plus, you should also learn about the 1 warning sign we've spotted with Localiza Rent a Car .

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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.