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The latest analyst coverage could presage a bad day for Loma Negra Compañía Industrial Argentina Sociedad Anónima (NYSE:LOMA), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
After this downgrade, Loma Negra Compañía Industrial Argentina Sociedad Anónima's six analysts are now forecasting revenues of AR$52b in 2021. This would be a major 24% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 23% to AR$64.45. Prior to this update, the analysts had been forecasting revenues of AR$61b and earnings per share (EPS) of AR$64.58 in 2021. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a measurable cut to revenues and some minor tweaks to earnings numbers.
The average price target was steady at US$6.87 even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. 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 Loma Negra Compañía Industrial Argentina Sociedad Anónima analyst has a price target of US$7.80 per share, while the most pessimistic values it at US$6.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Loma Negra Compañía Industrial Argentina Sociedad Anónima's growth to accelerate, with the forecast 24% annualised growth to the end of 2021 ranking favourably alongside historical growth of 5.3% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Loma Negra Compañía Industrial Argentina Sociedad Anónima is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Loma Negra Compañía Industrial Argentina Sociedad Anónima after today.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Loma Negra Compañía Industrial Argentina Sociedad Anónima analysts - going out to 2025, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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. 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.
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