As you might know, Bunge Limited (NYSE:BG) just kicked off its latest third-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 3.7% to hit US$10b. Bunge also reported a statutory profit of US$1.84, which was an impressive 962% above what the analysts had forecast. The 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Bunge after the latest results.
After the latest results, the seven analysts covering Bunge are now predicting revenues of US$40.6b in 2021. If met, this would reflect a reasonable 2.7% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 43% to US$4.85. Before this earnings report, the analysts had been forecasting revenues of US$40.1b and earnings per share (EPS) of US$4.32 in 2021. Although the revenue estimates have not really changed, we can see there's been a decent improvement in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 7.7% to US$68.25. 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 Bunge analyst has a price target of US$82.00 per share, while the most pessimistic values it at US$61.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Bunge's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 2.7%, well above its historical decline of 1.2% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 2.9% per year. So while Bunge's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Bunge's earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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. At Simply Wall St, we have a full range of analyst estimates for Bunge 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 Bunge (of which 2 are potentially serious!) 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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