Vamos Shares Plunge 8% Amid Profit Crash Despite Operational Gains

Vamos Locação (VAMO3), Brazil’s largest heavy-equipment rental firm, saw its shares drop 8.7% to R$4.40 ($0.73) on May 7 after reporting a 45.6% annual net profit decline to R$107.8 million ($18 million) for Q1 2025.

The results, released May 6, revealed a company grappling with soaring interest rates while demonstrating operational resilience through strategic restructuring. Revenue grew 24% year-over-year to R$1.33 billion ($222 million), driven by record leasing asset sales and service income.

EBITDA rose 10.1% to R$886.7 million ($148 million), though both metrics fell short of analyst expectations. The net profit collapse stemmed from R$290 million ($48 million) in financial expenses, exacerbated by Brazil’s 14.7% benchmark rate.

Leverage improved slightly to 3.3x net debt/EBITDA from 3.6x. This marks Vamos’ second quarter as a pure-play rental operator following December’s spin-off of its dealership arm into Automob (AMOB3).

CEO Gustavo Couto emphasized “healthy demand” across sectors, with agribusiness comprising 30% of operations. Asset occupancy reached 85%, while used vehicle sales defied seasonal trends with an 82% revenue jump to R$290 million ($48 million).

The company’s 2025 guidance projects net profit of R$450–550 million ($75–92 million), 23% below consensus, and EBITDA of R$3.85–4.15 billion ($642–692 million). Capex will total R$2–2.2 billion ($333–367 million), part of a R$5 billion ($833 million) asset-purchase plan.

Vamos Faces Paradox of Operational Strengths

Analysts note structural challenges: BTG Pactual highlights “pressure from idle assets and margin compression,” while Itaú BBA praises reduced repossessions and R$700 million ($117 million) in renewed contracts.

Investors face a paradox – operational strengths clash with financial fragility. The stock trades at 5.6x EV/EBITDA, a 40% discount to historical averages.

BTG maintains a R$15 ($2.50) price target, betting on margin recovery, while Itaú’s R$11 ($1.83) target reflects caution. Vamos must now prove its R$1 billion ($167 million) Sempre Novo fleet-renewal program can offset Brazil’s harsh rate environment.

Market skepticism persists despite 28.5% annual earnings growth since 2020. The 8% single-day plunge erased R$900 million ($150 million) in market value, underscoring investor impatience with interest rate sensitivity.

With 85% institutional ownership, Vamos’ fate hinges on executing its asset-light pivot while navigating Latin America’s costliest borrowing climate.

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