Analysts Just Shaved Their Consorcio ARA, S. A. B. de C. V. (BMV:ARA) Forecasts Dramatically

The analysts covering Consorcio ARA, S. A. B. de C. V. (BMV:ARA) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the downgrade, the current consensus from Consorcio ARA S. A. B. de C. V's two analysts is for revenues of Mex$6.9b in 2024 which - if met - would reflect a modest 2.9% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to dip 6.6% to Mex$0.51 in the same period. Prior to this update, the analysts had been forecasting revenues of Mex$7.9b and earnings per share (EPS) of Mex$0.61 in 2024. Indeed, we can see that the analysts are a lot more bearish about Consorcio ARA S. A. B. de C. V's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Consorcio ARA S. A. B. de C. V

Analysts made no major changes to their price target of Mex$4.73, suggesting the downgrades are not expected to have a long-term impact on Consorcio ARA S. A. B. de C. V's valuation.

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. One thing stands out from these estimates, which is that Consorcio ARA S. A. B. de C. V is forecast to grow faster in the future than it has in the past, with revenues expected to display 2.9% annualised growth until the end of 2024. If achieved, this would be a much better result than the 3.1% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 13% per year. So although Consorcio ARA S. A. B. de C. V's revenue growth is expected to improve, it is still expected to grow slower than the 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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower 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 Consorcio ARA S. A. B. de C. V after the downgrade.

In light of the downgrade, our automated discounted cash flow valuation tool suggests that Consorcio ARA S. A. B. de C. V could now be moderately overvalued. Find out why, and see how we estimate the valuation for 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.