It's been a sad week for TIM S.A. (BVMF:TIMS3), who've watched their investment drop 10% to R$19.30 in the week since the company reported its second-quarter result. Revenues were R$6.9b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at R$0.41, an impressive 23% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on TIM after the latest results.
Taking into account the latest results, the most recent consensus for TIM from 15 analysts is for revenues of R$28.0b in 2026. If met, it would imply a modest 2.3% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to increase 2.9% to R$1.86. In the lead-up to this report, the analysts had been modelling revenues of R$28.1b and earnings per share (EPS) of R$1.96 in 2026. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
See our latest analysis for TIM
The consensus price target held steady at R$25.75, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values TIM at R$30.00 per share, while the most bearish prices it at R$22.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. It's pretty clear that there is an expectation that TIM's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 4.6% growth on an annualised basis. This is compared to a historical growth rate of 8.9% over the past five years. Compare this to the 104 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.4% per year. So it's pretty clear that, while TIM's revenue growth is expected to slow, it's expected to grow roughly in line with the 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. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on TIM. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple TIM analysts - going out to 2028, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for TIM that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.