Earnings Miss: Fresh Del Monte Produce Inc. Missed EPS By 26% And Analysts Are Revising Their Forecasts

It's been a mediocre week for Fresh Del Monte Produce Inc. (NYSE:FDP) shareholders, with the stock dropping 17% to US$28.66 in the week since its latest yearly results. It looks like a pretty bad result, all things considered. Although revenues of US$4.5b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 26% to hit US$1.37 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Fresh Del Monte Produce

Taking into account the latest results, the latest consensus from Fresh Del Monte Produce's lone analyst is for revenues of US$4.67b in 2020, which would reflect an okay 4.0% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to leap 54% to US$2.12. In the lead-up to this report, analysts had been modelling revenues of US$4.95b and earnings per share (EPS) of US$2.38 in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a real cut to earnings per share forecasts.

The average price target climbed 11% to US$41.00 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Fresh Del Monte Produce's past performance and to peers in the same market. Analysts are definitely expecting Fresh Del Monte Produce's growth to accelerate, with the forecast 4.0% growth ranking favourably alongside historical growth of 3.1% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 2.7% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Fresh Del Monte Produce is expected to grow much faster than its market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Fresh Del Monte Produce. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.

It might also be worth considering whether Fresh Del Monte Produce's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.