Analysts Have Been Trimming Their Magazine Luiza S.A. (BVMF:MGLU3) Price Target After Its Latest Report
Shareholders will be ecstatic, with their stake up 39% over the past week following Magazine Luiza S.A.'s (BVMF:MGLU3) latest quarterly results. It was a pretty bad result overall; while revenues were in line with expectations at R$8.9b, statutory losses exploded to R$0.014 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Magazine Luiza from ten analysts is for revenues of R$43.0b in 2027. If met, it would imply a decent 13% increase on its revenue over the past 12 months. Per-share earnings are expected to leap 420% to R$0.67. In the lead-up to this report, the analysts had been modelling revenues of R$42.9b and earnings per share (EPS) of R$0.68 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
View our latest analysis for Magazine Luiza
With no major changes to earnings forecasts, the consensus price target fell 5.7% to R$9.43, suggesting that the analysts might have previously been hoping for an earnings upgrade. 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 Magazine Luiza at R$16.00 per share, while the most bearish prices it at R$4.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. The analysts are definitely expecting Magazine Luiza's growth to accelerate, with the forecast 9.9% annualised growth to the end of 2027 ranking favourably alongside historical growth of 1.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 13% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Magazine Luiza is expected to grow slower than 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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Magazine Luiza analysts - going out to 2028, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Magazine Luiza (at least 1 which is significant) , and understanding them should be part of your investment process.
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