Results: GMéxico Transportes, S.A.B. de C.V. Exceeded Expectations And The Consensus Has Updated Its Estimates

Shareholders might have noticed that GMéxico Transportes, S.A.B. de C.V. (BMV:GMXT) filed its third-quarter result this time last week. The early response was not positive, with shares down 3.2% to Mex$29.68 in the past week. It looks like a credible result overall - although revenues of Mex$12b were what the analysts expected, GMéxico Transportes. de surprised by delivering a (statutory) profit of Mex$0.39 per share, an impressive 22% above what was forecast. 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.

See our latest analysis for GMéxico Transportes. de

Following the latest results, GMéxico Transportes. de's ten analysts are now forecasting revenues of Mex$54.9b in 2021. This would be a solid 19% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 60% to Mex$2.30. In the lead-up to this report, the analysts had been modelling revenues of Mex$50.3b and earnings per share (EPS) of Mex$1.78 in 2021. So it seems there's been a definite increase in optimism about GMéxico Transportes. de's future following the latest results, with a considerable lift to the earnings per share forecasts in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$1.59, suggesting that the forecast performance does not have a long term impact on the company's 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. Currently, the most bullish analyst values GMéxico Transportes. de at US$36.06 per share, while the most bearish prices it at US$26.47. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily 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. It's clear from the latest estimates that GMéxico Transportes. de's rate of growth is expected to accelerate meaningfully, with the forecast 19% revenue growth noticeably faster than its historical growth of 11%p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 16% per year. GMéxico Transportes. de 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 biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around GMéxico Transportes. de's earnings potential next year. They also upgraded their revenue forecasts, although the latest estimates suggest that GMéxico Transportes. de will grow in line with the overall industry. The consensus price target held steady at Mex$1.59, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple GMéxico Transportes. de analysts - going out to 2022, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with GMéxico Transportes. de .

When trading GMéxico Transportes. de or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.