Analysts' Revenue Estimates For Companhia de Saneamento de Minas Gerais (BVMF:CSMG3) Are Surging Higher

Companhia de Saneamento de Minas Gerais (BVMF:CSMG3) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.

Following the upgrade, the most recent consensus for Companhia de Saneamento de Minas Gerais from its nine analysts is for revenues of R$7.1b in 2023 which, if met, would be a notable 16% increase on its sales over the past 12 months. Per-share earnings are expected to surge 33% to R$2.96. Previously, the analysts had been modelling revenues of R$6.5b and earnings per share (EPS) of R$2.39 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Companhia de Saneamento de Minas Gerais

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of R$17.57, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Companhia de Saneamento de Minas Gerais at R$19.70 per share, while the most bearish prices it at R$14.50. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Companhia de Saneamento de Minas Gerais is an easy business to forecast or the underlying assumptions are obvious.

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 Companhia de Saneamento de Minas Gerais' rate of growth is expected to accelerate meaningfully, with the forecast 16% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 7.0% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.6% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Companhia de Saneamento de Minas Gerais to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Companhia de Saneamento de Minas Gerais.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Companhia de Saneamento de Minas Gerais analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.