It's been a sad week for Fresh Del Monte Produce Inc. (NYSE:FDP), who've watched their investment drop 17% to US$28.66 in the week since the company reported its full-year result. Statutory earnings per share fell badly short of expectations, coming in at US$1.37, some 26% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$4.5b. 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Fresh Del Monte Produce from sole analyst is for revenues of US$4.67b in 2020, which is a credible 4.0% increase on its sales over the past 12 months. Statutory earnings per share are expected to surge 54% to US$2.12. Before this earnings report, analysts had been forecasting revenues of US$4.95b and earnings per share (EPS) of US$2.38 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.
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.
In addition, we can look to Fresh Del Monte Produce's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's clear from the latest estimates that Fresh Del Monte Produce's rate of growth is expected to accelerate meaningfully, with forecast 4.0% revenue growth noticeably faster than its historical growth of 3.1%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Fresh Del Monte Produce to grow faster than the wider 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. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
You can also see whether Fresh Del Monte Produce is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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