Companhia de Saneamento de Minas Gerais (BVMF:CSMG3) Just Released Its Second-Quarter Earnings: Here's What Analysts Think

Companhia de Saneamento de Minas Gerais (BVMF:CSMG3) came out with its second-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It was a workmanlike result, with revenues of R$1.4b coming in 2.2% ahead of expectations, and statutory earnings per share of R$0.63, in line with analyst appraisals. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Companhia de Saneamento de Minas Gerais

After the latest results, the consensus from Companhia de Saneamento de Minas Gerais' eight analysts is for revenues of R$5.50b in 2021, which would reflect a measurable 2.3% decline in sales compared to the last year of performance. Statutory earnings per share are expected to shrink 3.2% to R$2.24 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$5.50b and earnings per share (EPS) of R$2.21 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of R$19.74, showing that the business is executing well and in line with expectations. 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 Companhia de Saneamento de Minas Gerais, with the most bullish analyst valuing it at R$26.00 and the most bearish at R$14.50 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 Companhia de Saneamento de Minas Gerais shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 4.6% by the end of 2021. This indicates a significant reduction from annual growth of 7.3% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.9% per year. It's pretty clear that Companhia de Saneamento de Minas Gerais' revenues are expected to perform substantially worse 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. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Companhia de Saneamento de Minas Gerais going out to 2023, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Companhia de Saneamento de Minas Gerais .

If you're looking for stocks to buy, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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