Analysts Just Made A Huge Upgrade To Their CAP S.A. (SNSE:CAP) Forecasts

Celebrations may be in order for CAP S.A. (SNSE:CAP) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 14% to CL$8,738 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the upgrade, the most recent consensus for CAP from its five analysts is for revenues of US$2.7b in 2021 which, if met, would be a sizeable 28% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 516% to US$2.75. Before this latest update, the analysts had been forecasting revenues of US$2.4b and earnings per share (EPS) of US$2.00 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for CAP

With these upgrades, we're not surprised to see that the analysts have lifted their price target 13% to US$12.98 per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on CAP, with the most bullish analyst valuing it at US$12,009 and the most bearish at US$7,788 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that CAP's rate of growth is expected to accelerate meaningfully, with the forecast 28% revenue growth noticeably faster than its historical growth of 4.2% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.3% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect CAP to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, CAP could be worth investigating further.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for CAP going out to 2023, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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