Need To Know: Analysts Just Made A Substantial Cut To Their Compañía Cervecerías Unidas S.A. (SNSE:CCU) Estimates

Market forces rained on the parade of Compañía Cervecerías Unidas S.A. (SNSE:CCU) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the downgrade, the consensus from eight analysts covering Compañía Cervecerías Unidas is for revenues of CL$2.6t in 2023, implying a measurable 3.6% decline in sales compared to the last 12 months. Per-share earnings are expected to increase 6.6% to CL$341. Before this latest update, the analysts had been forecasting revenues of CL$3.0t and earnings per share (EPS) of CL$443 in 2023. Indeed, we can see that the analysts are a lot more bearish about Compañía Cervecerías Unidas' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Compañía Cervecerías Unidas

Despite the cuts to forecast earnings, there was no real change to the CL$6,703 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Compañía Cervecerías Unidas at CL$8,500 per share, while the most bearish prices it at CL$5,348. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Compañía Cervecerías Unidas' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 3.6% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 11% 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 6.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Compañía Cervecerías Unidas is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Compañía Cervecerías Unidas. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Compañía Cervecerías Unidas after the downgrade.

There might be good reason for analyst bearishness towards Compañía Cervecerías Unidas, like the risk of cutting its dividend. Learn more, and discover the 1 other risk we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.