Grupo Herdez, S.A.B. de C.V. Just Recorded A 19% EPS Beat: Here's What Analysts Are Forecasting Next

As you might know, Grupo Herdez, S.A.B. de C.V. (BMV:HERDEZ) just kicked off its latest quarterly results with some very strong numbers. Grupo Herdez. de beat earnings, with revenues hitting Mex$8.6b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 19%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Grupo Herdez. de

Taking into account the latest results, the consensus forecast from Grupo Herdez. de's three analysts is for revenues of Mex$37.3b in 2023, which would reflect a solid 12% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to climb 19% to Mex$3.31. In the lead-up to this report, the analysts had been modelling revenues of Mex$34.5b and earnings per share (EPS) of Mex$3.52 in 2023. So it's pretty clear consensus is mixed on Grupo Herdez. de after the latest results; whilethe analysts lifted revenue numbers, they also administered a small dip in per-share earnings expectations.

Curiously, the consensus price target rose 9.4% to Mex$55.63. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Grupo Herdez. de at Mex$60.00 per share, while the most bearish prices it at Mex$49.50. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. It's clear from the latest estimates that Grupo Herdez. de's rate of growth is expected to accelerate meaningfully, with the forecast 17% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 9.4% p.a. 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 4.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Grupo Herdez. de to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Grupo Herdez. de. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Grupo Herdez. de going out to 2025, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Grupo Herdez. de , and understanding these should be part of your investment process.

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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.