Need To Know: The Consensus Just Cut Its Crédito Real, S.A.B. de C.V., Sociedad Financiera de Objeto Múltiple, Entidad No Regulada (BMV:CREAL) Estimates For 2021

Today is shaping up negative for Crédito Real, S.A.B. de C.V., Sociedad Financiera de Objeto Múltiple, Entidad No Regulada (BMV:CREAL) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After this downgrade, Crédito Real. de Sociedad Financiera de Objeto Múltiple Entidad No Regulada's three analysts are now forecasting revenues of Mex$6.4b in 2021. This would be a huge 32% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 64% to Mex$3.33. Before this latest update, the analysts had been forecasting revenues of Mex$7.3b and earnings per share (EPS) of Mex$3.82 in 2021. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.

View our latest analysis for Crédito Real. de Sociedad Financiera de Objeto Múltiple Entidad No Regulada

Analysts made no major changes to their price target of Mex$17.03, suggesting the downgrades are not expected to have a long-term impact on Crédito Real. de Sociedad Financiera de Objeto Múltiple Entidad No Regulada'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. Currently, the most bullish analyst values Crédito Real. de Sociedad Financiera de Objeto Múltiple Entidad No Regulada at Mex$32.00 per share, while the most bearish prices it at Mex$13.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on 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. The analysts are definitely expecting Crédito Real. de Sociedad Financiera de Objeto Múltiple Entidad No Regulada's growth to accelerate, with the forecast 32% annualised growth to the end of 2021 ranking favourably alongside historical growth of 7.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Crédito Real. de Sociedad Financiera de Objeto Múltiple Entidad No Regulada to grow faster than the wider 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. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Crédito Real. de Sociedad Financiera de Objeto Múltiple Entidad No Regulada after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Crédito Real. de Sociedad Financiera de Objeto Múltiple Entidad No Regulada's financials, such as its declining profit margins. Learn more, and discover the 2 other concerns we've identified, for free on our platform here.

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This article by Simply Wall St is general in nature. 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.
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