Localiza Rent a Car SA (BVMF:RENT3) has just released its second quarter results: This is what analysts think

It was a sad week for Localiza Rent a Car SA (BVMF:RENT3), whose investments have fallen 20% to R$39.20 in the week since the release of its second-quarter results. The report was okay, and revenues came in at R$9.0 billion, which was roughly in line with analysts' estimates ahead of the results release. Analysts typically update their forecasts with each earnings announcement, and we can use their estimates to judge if their opinion of the company has changed or if there are any new concerns to consider. Therefore, we have gathered the latest statutory consensus estimates following the results release to see what might be in store for next year.

Check out our latest analysis for Localiza Rent a Car

Following the latest results, the twelve analysts covering Localiza Rent a Car are now forecasting revenues of R$38.0 billion in 2024. If this forecast is met, it would be a decent 15% increase in revenue compared to the last 12 months. Statutory earnings per share are expected to increase 110% to R$3.05. Prior to this earnings report, analysts had been forecasting revenues of R$37.3 billion and earnings per share (EPS) of R$3.04 in 2024. So, it looks like there hasn't been a major change in sentiment following the latest results, although analysts have slightly increased their revenue forecasts.

Although revenue estimates were raised, there was no change in the consensus price target of R$65.54. This suggests that analysts are focused on earnings as a value driver. However, fixating on a single price target may be unwise since the consensus target is actually the average of analysts' price targets. Therefore, some investors like to look at the range of estimates to see if there are any differing opinions on the company's valuation. There are some differing views on Localiza Rent a Car. The most optimistic analyst values ​​the company at R$89.00 and the most pessimistic at R$50.00 per share. There are definitely some differing views on the stock, but the range of estimates is not wide enough, in our view, to suggest that the situation is unpredictable.

One way to put these forecasts into a larger context is to look at them in comparison to past performance, and to the performance of other companies in the same industry. From the latest estimates, we can conclude that the forecasts expect Localiza Rent a Car's historical trends to continue, as the 33% annual revenue growth through the end of 2024 is roughly in line with the 29% annual growth over the past five years. Compare this to the broader industry, for which analyst estimates (as a whole) are calling for revenue growth of 13% per year. So, while Localiza Rent a Car is expected to maintain its revenue growth rate, it is definitely expected to grow faster than the industry as a whole.

The conclusion

The most obvious conclusion is that the business outlook has not changed much recently. The analysts are keeping their earnings forecasts unchanged, remaining in line with previous estimates. Encouragingly, they have also raised their revenue estimates and are forecasting that the company will grow faster than the wider industry. The consensus price target has not really changed, suggesting that the company's intrinsic value has not changed much with the latest estimates.

With that in mind, we wouldn't jump to a conclusion about Localiza Rent a Car too quickly. Long-term profitability is much more important than next year's earnings. We have forecasts for Localiza Rent a Car until 2026 and you can see them here for free on our platform.

However, one should always think about the risks. A typical example: We have 3 warning signs for Localiza Rent a Car You should be aware of these, and one of them may be serious.

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This Simply Wall St article is of a general nature. We comment solely on historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.