The Companhia de Saneamento de Minas Gerais (BVMF:CSMG3) Full-Year Results Are Out And Analysts Have Published New Forecasts

It's been a sad week for Companhia de Saneamento de Minas Gerais (BVMF:CSMG3), who've watched their investment drop 15% to R$20.36 in the week since the company reported its full-year result. It was a workmanlike result, with revenues of R$7.9b coming in 5.0% ahead of expectations, and statutory earnings per share of R$3.47, in line with analyst appraisals. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

After the latest results, the consensus from Companhia de Saneamento de Minas Gerais' nine analysts is for revenues of R$7.64b in 2025, which would reflect a discernible 3.0% decline in revenue compared to the last year of performance. Statutory earnings per share are predicted to increase 8.2% to R$3.76. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$8.05b and earnings per share (EPS) of R$3.61 in 2025. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

Check out our latest analysis for Companhia de Saneamento de Minas Gerais

The consensus has made no major changes to the price target of R$24.80, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Companhia de Saneamento de Minas Gerais, with the most bullish analyst valuing it at R$27.80 and the most bearish at R$22.00 per share. This is a very narrow spread of estimates, implying either that Companhia de Saneamento de Minas Gerais is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 3.0% annualised decline to the end of 2025. That is a notable change from historical growth of 9.4% 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 0.4% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Companhia de Saneamento de Minas Gerais is expected to lag the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Companhia de Saneamento de Minas Gerais following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings are more important to the intrinsic value of the business. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Companhia de Saneamento de Minas Gerais analysts - going out to 2027, 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 3 warning signs for Companhia de Saneamento de Minas Gerais (1 is concerning!) 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.