Nemak, S. A. B. de C. V. Just Missed Earnings - But Analysts Have Updated Their Models

Nemak, S. A. B. de C. V. (BMV:NEMAKA) just released its latest yearly report and things are not looking great. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$5.0b, statutory earnings missed forecasts by an incredible 96%, coming in at just US$0.0014 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Nemak S. A. B. de C. V

After the latest results, the five analysts covering Nemak S. A. B. de C. V are now predicting revenues of US$5.21b in 2024. If met, this would reflect a modest 4.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 1,045% to US$0.016. In the lead-up to this report, the analysts had been modelling revenues of US$5.50b and earnings per share (EPS) of US$0.045 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a large cut to earnings per share numbers.

The analysts made no major changes to their price target of Mex$6.82, suggesting the downgrades are not expected to have a long-term impact on Nemak S. A. B. de C. V's valuation. 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 Nemak S. A. B. de C. V, with the most bullish analyst valuing it at Mex$11.00 and the most bearish at Mex$5.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for 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. We would highlight that Nemak S. A. B. de C. V's revenue growth is expected to slow, with the forecast 4.4% annualised growth rate until the end of 2024 being well below the historical 6.8% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.7% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Nemak S. A. B. de C. V.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Nemak S. A. B. de C. V. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.

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. We have forecasts for Nemak S. A. B. de C. V going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Nemak S. A. B. de C. V you should know about.

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

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.