CA$4.35: That's What Analysts Think Foraco International SA (TSE:FAR) Is Worth After Its Latest Results

Shareholders might have noticed that Foraco International SA (TSE:FAR) filed its third-quarter result this time last week. The early response was not positive, with shares down 2.6% to CA$2.25 in the past week. Foraco International reported US$80m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.079 beat expectations, being 3.2% higher than what the analysts expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Foraco International after the latest results.

View our latest analysis for Foraco International

Taking into account the latest results, the current consensus from Foraco International's three analysts is for revenues of US$339.4m in 2025. This would reflect an okay 6.3% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 44% to US$0.39. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$360.6m and earnings per share (EPS) of US$0.40 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.1% to CA$4.35. 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 Foraco International, with the most bullish analyst valuing it at CA$5.00 and the most bearish at CA$4.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Foraco International's revenue growth is expected to slow, with the forecast 5.0% annualised growth rate until the end of 2025 being well below the historical 14% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 16% per year. Factoring in the forecast slowdown in growth, it seems obvious that Foraco International is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Foraco International's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Foraco International. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Foraco International analysts - going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Foraco International that you should be aware of.

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.