Analysts Have Just Cut Their Colbún S.A. (SNSE:COLBUN) Revenue Estimates By 11%

The latest analyst coverage could presage a bad day for Colbún S.A. (SNSE:COLBUN), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the latest consensus from Colbún's three analysts is for revenues of US$1.4b in 2021, which would reflect a modest 4.5% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to sink 11% to US$0.0083 in the same period. Previously, the analysts had been modelling revenues of US$1.6b and earnings per share (EPS) of US$0.017 in 2021. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for Colbún

Analysts made no major changes to their price target of US$0.20, suggesting the downgrades are not expected to have a long-term impact on Colbún's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Colbún, with the most bullish analyst valuing it at US$162 and the most bearish at US$129 per share. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Colbún's growth to accelerate, with the forecast 6.1% annualised growth to the end of 2021 ranking favourably alongside historical growth of 0.6% 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 2.6% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Colbún to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Colbún going forwards.

There might be good reason for analyst bearishness towards Colbún, like the risk of cutting its dividend. Learn more, and discover the 3 other concerns we've identified, for free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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