Grupo Lala, S.A.B. de C.V. Just Recorded A 59% EPS Beat: Here's What Analysts Are Forecasting Next

Grupo Lala, S.A.B. de C.V. (BMV:LALAB) just released its quarterly report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 4.0% to hit Mex$20b. Grupo Lala. de also reported a statutory profit of Mex$0.17, which was an impressive 59% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Grupo Lala. de

Taking into account the latest results, Grupo Lala. de's ten analysts currently expect revenues in 2020 to be Mex$78.7b, approximately in line with the last 12 months. Statutory per share are forecast to be Mex$0.58, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of Mex$78.0b and earnings per share (EPS) of Mex$0.68 in 2020. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at Mex$16.42, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. The most optimistic Grupo Lala. de analyst has a price target of Mex$25.00 per share, while the most pessimistic values it at Mex$10.20. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Grupo Lala. de's revenue growth is expected to slow, with forecast 1.3% increase next year well below the historical 12%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.6% per year. Factoring in the forecast slowdown in growth, it seems obvious that Grupo Lala. de is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at Mex$16.42, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Grupo Lala. de analysts - going out to 2022, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Grupo Lala. de (of which 1 is a bit unpleasant!) you should know about.

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