News Flash: 2 Analysts Think Grupo Rotoplas S.A.B. de C.V. (BMV:AGUA) Earnings Are Under Threat

One thing we could say about the analysts on Grupo Rotoplas S.A.B. de C.V. (BMV:AGUA) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After the downgrade, the twin analysts covering Grupo Rotoplas. de are now predicting revenues of Mex$13b in 2024. If met, this would reflect a reasonable 7.8% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 128% to Mex$1.37. Before this latest update, the analysts had been forecasting revenues of Mex$15b and earnings per share (EPS) of Mex$2.70 in 2024. 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 Grupo Rotoplas. de

Despite the cuts to forecast earnings, there was no real change to the Mex$43.50 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

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. It's pretty clear that there is an expectation that Grupo Rotoplas. de's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.8% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.8% annually. So it's pretty clear that, while Grupo Rotoplas. de's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Grupo Rotoplas. de after the downgrade.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Grupo Rotoplas. de, including its declining profit margins. Learn more, and discover the 4 other risks 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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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.