Adecoagro S.A. Just Beat Revenue Estimates By 11%

Investors in Adecoagro S.A. (NYSE:AGRO) had a good week, as its shares rose 2.1% to close at US$8.70 following the release of its first-quarter results. Adecoagro beat revenue forecasts by a solid 11% to hit US$247m. Statutory earnings per share came in at US$0.98, in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Adecoagro

Following the recent earnings report, the consensus from six analysts covering Adecoagro is for revenues of US$1.27b in 2023, implying an uncomfortable 8.2% decline in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 67% to US$1.03. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.27b and earnings per share (EPS) of US$1.44 in 2023. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$10.05, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Adecoagro, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$8.10 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Adecoagro's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 11% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.0% per year. It's pretty clear that Adecoagro's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Adecoagro. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Adecoagro's revenues are expected to perform worse 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 Adecoagro going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 4 warning signs for Adecoagro (of which 1 is potentially serious!) you should know about.

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

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.