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Cosan (CZZ) Up 14% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Cosan . Shares have added about 14% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cosan due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Cosan’s Q1 Net Income & Revenues Improve Y/Y

Cosan’s adjusted net income totaled R$195.5 million ($51.9 million) in first-quarter 2019, up 61.3% from the year-ago tally of R$121.2 million ($37.3 million). Net income surged 79% from R$106.3 million ($32.7 million) recorded in first-quarter 2018.

Revenues Increase Y/Y

In the reported quarter, Cosan’s net revenues came in at R$18,621.1 million ($4,943 million), reflecting year-over-year growth of 24.9%.

Rise in Cost of Sales Impacts Gross Margin

Cosan’s cost of sales and services sold in the third quarter marked a 38.1% year-over-year rise to R$3,469.3 million ($921 million). It represents 74% of net revenues versus 71% witnessed in the year-ago quarter. Gross profit increased 21.4% year over year to R$1,250.9 million ($332 million), while gross margin came in at 26.5% compared to 29.0% in the year-ago quarter.

Selling, general and administrative expenses flared up 14% year over year to R$522.5 million ($138.6 million), representing 11% of net revenues.

Balance Sheet

Exiting the March-end quarter, Cosan’s cash and cash equivalents were R$4,662 million ($1,188.3 million), up from R$3,622 million ($1,096 million) reported at the end of 2018. Loans and borrowings increased 7.7% to R$24,316 million ($6,197.7 million) from R$22,574 million ($6,830.4 million) as of December 2018.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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