Earnings Update: Omega Energia S.A. (BVMF:MEGA3) Just Reported Its Second-Quarter Results And Analysts Are Updating Their Forecasts

Last week, you might have seen that Omega Energia S.A. (BVMF:MEGA3) released its quarterly result to the market. The early response was not positive, with shares down 2.6% to R$11.10 in the past week. Revenues came in 61% better than analyst models expected, at R$609m, although statutory losses were 15% larger than expected, at R$0.23 per share. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Omega Energia

Following the recent earnings report, the consensus from five analysts covering Omega Energia is for revenues of R$1.82b in 2023. This implies a sizeable 30% decline in revenue compared to the last 12 months. Per-share losses are expected to explode, reaching R$0.47 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of R$1.68b and losses of R$0.34 per share in 2023. While this year's revenue estimates increased, there was also a massive increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

There was no major change to the consensus price target of R$13.61, with growing revenues seemingly enough to offset the concern of growing losses. 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 Omega Energia at R$16.00 per share, while the most bearish prices it at R$11.50. 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 Omega Energia shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 50% by the end of 2023. This indicates a significant reduction from annual growth of 20% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 3.3% per year. The forecasts do look bearish for Omega Energia, since they're expecting it to shrink faster than the industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, they also upgraded their revenue estimates, although Omega Energia'sthey are still expected to trail 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.

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 estimates - from multiple Omega Energia analysts - going out to 2025, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Omega Energia you should be aware of, and 1 of them doesn't sit too well with us.

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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.