These Analysts Think ALPEK, S.A.B. de C.V.'s (BMV:ALPEKA) Sales Are Under Threat

Market forces rained on the parade of ALPEK, S.A.B. de C.V. (BMV:ALPEKA) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from ten analysts covering ALPEK. de is for revenues of Mex$174b in 2023, implying a not inconsiderable 18% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to dive 40% to Mex$3.92 in the same period. Previously, the analysts had been modelling revenues of Mex$194b and earnings per share (EPS) of Mex$4.14 in 2023. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a minor downgrade to earnings per share numbers as well.

See our latest analysis for ALPEK. de

The consensus price target fell 5.6% to Mex$33.24, with the weaker earnings outlook clearly leading analyst valuation estimates. 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 ALPEK. de at Mex$43.40 per share, while the most bearish prices it at Mex$28.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 18% by the end of 2023. This indicates a significant reduction from annual growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 2.0% annually for the foreseeable future. The forecasts do look bearish for ALPEK. de, since they're expecting it to shrink faster than the industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for ALPEK. de. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that ALPEK. de revenue is expected to perform worse than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on ALPEK. de after today.

There might be good reason for analyst bearishness towards ALPEK. de, like a weak balance sheet. Learn more, and discover the 3 other warning signs we've identified, for free on our platform here.

You can also see our analysis of ALPEK. de's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.