Rainbows and Unicorns: The Grupo Carso, S.A.B. de C.V. (BMV:GCARSOA1) Analyst Just Became A Lot More Optimistic

Shareholders in Grupo Carso, S.A.B. de C.V. (BMV:GCARSOA1) may be thrilled to learn that the covering analyst has just delivered a major upgrade to their near-term forecasts. The analyst greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investor sentiment seems to be improving too, with the share price up 7.9% to Mex$74.59 over the past 7 days. Could this big upgrade push the stock even higher?

Following the upgrade, the latest consensus from Grupo Carso. de's solo analyst is for revenues of Mex$175b in 2022, which would reflect a meaningful 9.2% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to accumulate 5.9% to Mex$6.18. Before this latest update, the analyst had been forecasting revenues of Mex$137b and earnings per share (EPS) of Mex$4.39 in 2022. There has definitely been an improvement in perception recently, with the analyst substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for Grupo Carso. de

Although the analyst has upgraded their earnings estimates, there was no change to the consensus price target of Mex$70.75, suggesting that the forecast performance does not have a long term impact on the company's 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 Grupo Carso. de, with the most bullish analyst valuing it at Mex$79.50 and the most bearish at Mex$62.00 per share. This is a very narrow spread of estimates, implying either that Grupo Carso. de is an easy company to value, or - more likely - the analyst is relying heavily on some key assumptions.

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. The analyst is definitely expecting Grupo Carso. de's growth to accelerate, with the forecast 19% annualised growth to the end of 2022 ranking favourably alongside historical growth of 7.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.1% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Grupo Carso. de to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that the analyst upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Grupo Carso. de.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Grupo Carso. de going out as far as 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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.