Earnings Miss: Megacable Holdings, S. A. B. de C. V. Missed EPS By 47% And Analysts Are Revising Their Forecasts

Investors in Megacable Holdings, S. A. B. de C. V. (BMV:MEGACPO) had a good week, as its shares rose 6.8% to close at Mex$42.14 following the release of its quarterly results. Statutory earnings per share fell badly short of expectations, coming in at Mex$0.54, some 47% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at Mex$7.4b. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Megacable Holdings S. A. B. de C. V after the latest results.

View our latest analysis for Megacable Holdings S. A. B. de C. V

Taking into account the latest results, the consensus forecast from Megacable Holdings S. A. B. de C. V's nine analysts is for revenues of Mex$29.9b in 2023. This reflects a credible 5.0% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be Mex$3.59, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of Mex$29.9b and earnings per share (EPS) of Mex$3.69 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at Mex$60.15, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Megacable Holdings S. A. B. de C. V, with the most bullish analyst valuing it at Mex$90.00 and the most bearish at Mex$36.00 per share. 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.

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. The analysts are definitely expecting Megacable Holdings S. A. B. de C. V's growth to accelerate, with the forecast 10% annualised growth to the end of 2023 ranking favourably alongside historical growth of 8.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. Megacable Holdings S. A. B. de C. V is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at Mex$60.15, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Megacable Holdings S. A. B. de C. V going out to 2025, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Megacable Holdings S. A. B. de C. V that you should be aware of.

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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.