Aguas Andinas S.A. Just Missed Revenue By 11%: Here's What Analysts Think Will Happen Next

Last week saw the newest quarterly earnings release from Aguas Andinas S.A. (SNSE:AGUAS-A), an important milestone in the company's journey to build a stronger business. Revenues were CL$105b, 11% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of CL$23.16 being in line with what the analysts anticipated. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Aguas Andinas after the latest results.

See our latest analysis for Aguas Andinas

Taking into account the latest results, the current consensus from Aguas Andinas' four analysts is for revenues of CL$501.5b in 2021, which would reflect a satisfactory 2.7% increase on its sales over the past 12 months. Statutory per-share earnings are expected to be CL$18.55, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of CL$538.4b and earnings per share (EPS) of CL$20.43 in 2021. 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.

Despite the cuts to forecast earnings, there was no real change to the CL$339 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Aguas Andinas, with the most bullish analyst valuing it at CL$414 and the most bearish at CL$308 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Aguas Andinas' past performance and to peers in the same industry. Next year brings more of the same, according to the analysts, with revenue forecast to grow 2.7%, in line with its 2.6% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 6.0% per year. So it's pretty clear that Aguas Andinas is expected to grow slower than similar companies in the same industry.

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 revenues will perform worse than the wider industry. The consensus price target held steady at CL$339, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Aguas Andinas going out to 2023, and you can see them free on our platform here.

Even so, be aware that Aguas Andinas is showing 1 warning sign in our investment analysis , you should know about...

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