Parque Arauco S.A. Just Missed Earnings - But Analysts Have Updated Their Models

Parque Arauco S.A. (SNSE:PARAUCO) shareholders are probably feeling a little disappointed, since its shares fell 9.6% to CL$1,051 in the week after its latest full-year results. Statutory earnings per share fell badly short of expectations, coming in at CL$2.00, some 96% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at CL$126b. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Parque Arauco

Taking into account the latest results, the most recent consensus for Parque Arauco from seven analysts is for revenues of CL$182.4b in 2021 which, if met, would be a sizeable 45% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 3,006% to CL$63.30. In the lead-up to this report, the analysts had been modelling revenues of CL$185.4b and earnings per share (EPS) of CL$66.46 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at CL$1,545, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. There are some variant perceptions on Parque Arauco, with the most bullish analyst valuing it at CL$2,100 and the most bearish at CL$1,012 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Parque Arauco's growth to accelerate, with the forecast 45% growth ranking favourably alongside historical growth of 1.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 18% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Parque Arauco is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Parque Arauco. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at CL$1,545, with the latest estimates not enough to have an impact on their price targets.

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. At Simply Wall St, we have a full range of analyst estimates for Parque Arauco going out to 2022, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 3 warning signs for Parque Arauco (1 makes us a bit uncomfortable!) that you should be aware of.

If you’re looking to trade Parque Arauco, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.