São Martinho S.A. (BVMF:SMTO3) First-Quarter Results Just Came Out: Here's What Analysts Are Forecasting For This Year
São Martinho S.A. (BVMF:SMTO3) last week reported its latest first-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues were R$1.5b, with São Martinho reporting some 6.4% below analyst 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, São Martinho's eight analysts currently expect revenues in 2027 to be R$7.13b, approximately in line with the last 12 months. Statutory earnings per share are expected to nosedive 52% to R$1.20 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$7.26b and earnings per share (EPS) of R$1.41 in 2027. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
See our latest analysis for São Martinho
It might be a surprise to learn that the consensus price target was broadly unchanged at R$19.53, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. There are some variant perceptions on São Martinho, with the most bullish analyst valuing it at R$25.00 and the most bearish at R$14.80 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.
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. It's pretty clear that there is an expectation that São Martinho's revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 0.5% growth on an annualised basis. This is compared to a historical growth rate of 7.3% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.5% annually. Factoring in the forecast slowdown in growth, it seems obvious that São Martinho is also expected to grow slower than other industry participants.
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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at R$19.53, 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. We have forecasts for São Martinho going out to 2029, and you can see them free on our platform here.
You still need to take note of risks, for example - São Martinho has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
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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.