Stock Analysis

Patria Investments Limited (NASDAQ:PAX) Just Reported Full-Year Earnings: Have Analysts Changed Their Mind On The Stock?

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Last week saw the newest yearly earnings release from Patria Investments Limited (NASDAQ:PAX), an important milestone in the company's journey to build a stronger business. Revenues were US$236m, and Patria Investments came in a solid 13% ahead of expectations. 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.

Check out our latest analysis for Patria Investments

NasdaqGS:PAX Earnings and Revenue Growth February 18th 2022

After the latest results, the five analysts covering Patria Investments are now predicting revenues of US$249.4m in 2022. If met, this would reflect a modest 5.9% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to bounce 20% to US$1.07. Before this earnings report, the analysts had been forecasting revenues of US$244.1m and earnings per share (EPS) of US$1.07 in 2022. There doesn't appear to have been a major change in sentiment following the results, other than the slight bump in revenue estimates.

Even though revenue forecasts increased, there was no change to the consensus price target of US$23.67, suggesting the analysts are focused on earnings as the driver of value creation. 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. The most optimistic Patria Investments analyst has a price target of US$28.00 per share, while the most pessimistic values it at US$20.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Patria Investments' revenue growth is expected to slow, with the forecast 5.9% annualised growth rate until the end of 2022 being well below the historical 27% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.1% annually. Even after the forecast slowdown in growth, it seems obvious that Patria Investments is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Patria Investments going out to 2024, and you can see them free on our platform here.

You still need to take note of risks, for example - Patria Investments has 1 warning sign we think you should be aware of.

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