It's been a good week for Prosegur Cash, S.A. (BME:CASH) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.1% to €0.68. Results look mixed - while revenue fell marginally short of analyst estimates at €368m, statutory earnings were in line with expectations, at €0.11 per share. 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 Prosegur Cash after the latest results.
After the latest results, the ten analysts covering Prosegur Cash are now predicting revenues of €1.72b in 2021. If met, this would reflect a credible 7.6% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 72% to €0.11. Yet prior to the latest earnings, the analysts had been anticipated revenues of €1.75b and earnings per share (EPS) of €0.11 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.
It might be a surprise to learn that the consensus price target was broadly unchanged at €1.24, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Prosegur Cash, with the most bullish analyst valuing it at €1.70 and the most bearish at €0.80 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the 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. One thing stands out from these estimates, which is that Prosegur Cash is forecast to grow faster in the future than it has in the past, with revenues expected to grow 7.6%. If achieved, this would be a much better result than the 1.6% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 6.2% next year. So while Prosegur Cash's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall 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. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Prosegur Cash going out to 2023, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Prosegur Cash you should know about.
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