This Just In: Analysts Are Boosting Their CAP S.A. (SNSE:CAP) Outlook for This Year

Shareholders in CAP S.A. (SNSE:CAP) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.

Following the upgrade, the current consensus from CAP's six analysts is for revenues of US$4.0b in 2021 which - if met - would reflect a sizeable 31% increase on its sales over the past 12 months. Statutory earnings per share are presumed to jump 167% to US$9.06. Previously, the analysts had been modelling revenues of US$3.6b and earnings per share (EPS) of US$8.17 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.

See our latest analysis for CAP

Despite these upgrades, the analysts have not made any major changes to their price target of US$19.84, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic CAP analyst has a price target of US$19,253 per share, while the most pessimistic values it at US$10,136. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. The analysts are definitely expecting CAP's growth to accelerate, with the forecast 43% annualised growth to the end of 2021 ranking favourably alongside historical growth of 8.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 6.5% annually. It seems obvious that as part of the brighter growth outlook, CAP is expected 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 this year. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at CAP.

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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