Esporte Banco do Brasil S.A. Just Recorded A 27% EPS Beat: Here’s What Analysts Are Forecasting Next

Esporte Banco do Brasil S.A. Just Recorded A 27% EPS Beat: Here’s What Analysts Are Forecasting Next

Esporte Banco do Brasil S.A. (BVMF:BBAS3) came out with its second-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues were R$14b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at R$1.95, an impressive 27% ahead of estimates. 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.

View our latest analysis for Banco do Brasil

BOVESPA:BBAS3 Earnings and Revenue Growth August 8th 2021 Taking into account the latest results, the 14 analysts covering Banco do Brasil provided consensus estimates of R$59.4b revenue in 2021, which would reflect a chunky 15% decline on its sales over the past 12 months. Statutory earnings per share are predicted to leap 30% to R$6.15. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$59.4b and earnings per share (EPS) of R$6.05 in 2021. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of R$44.07, showing that the business is executing well and in line with expectations. 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. Currently, the most bullish analyst values Banco do Brasil at R$53.00 per share, while the most bearish prices it at R$36.00. 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.

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. We would highlight that sales are expected to reverse, with a forecast 27% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 2.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 11% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Banco do Brasil is expected to lag 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Banco do Brasil’s revenues are expected to perform worse than the wider industry. The consensus price target held steady at R$44.07, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Banco do Brasil going out to 2023, and you can see them free on our platform here..

You still need to take note of risks, for example – Banco do Brasil has 2 warning signs (and 1 which doesn’t sit too well with us) we think you should know about.

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