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Revenue Miss: Credicorp Ltd. Fell 42% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models

·4 min read

It's been a good week for Credicorp Ltd. (NYSE:BAP) shareholders, because the company has just released its latest annual results, and the shares gained 8.0% to US$166. Credicorp reported a serious revenue miss, with sales of US$8.0b falling a huge 42% short of analyst estimates. The bright side is that statutory earnings per share of US$4.34 were in line with forecasts. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Credicorp after the latest results.

View our latest analysis for Credicorp

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Taking into account the latest results, the current consensus, from the ten analysts covering Credicorp, is for revenues of US$4.11b in 2021, which would reflect a concerning 49% reduction in Credicorp's sales over the past 12 months. Statutory earnings per share are predicted to soar 34% to US$11.21. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$15.0b and earnings per share (EPS) of US$41.01 in 2021. It looks like sentiment has declined substantially in the aftermath of these results, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.

The analysts made no major changes to their price target of US$174, suggesting the downgrades are not expected to have a long-term impact on Credicorp's valuation. 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. The most optimistic Credicorp analyst has a price target of US$200 per share, while the most pessimistic values it at US$134. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Credicorp shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 49%, a significant reduction from annual growth of 0.5% 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 6.9% annually for the foreseeable future. It's pretty clear that Credicorp's revenues are expected to perform substantially worse than the wider industry.

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. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$174, 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. At Simply Wall St, we have a full range of analyst estimates for Credicorp going out to 2022, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 3 warning signs for Credicorp you should know about.

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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