Q3 Earnings Disappoint the Market as Tenda Shares Plunge 17% — What to Expect Now

Tenda’s third-quarter earnings came in well below market expectations, and the core business margin shrank. Investors holding the stock have already absorbed the blow. The lingering question is whether Tenda can deliver on its 2026 profit target, which management maintained.

Why Is TEND3 Dropping?

Because of the financial results. TEND3 shares led the Ibovespa's declines during Thursday's session (Nov. 5) after the homebuilder reported weak numbers for the third quarter of 2026 (Q3 2026). The stock dropped 17.72%, closing at R$ 16.25. According to Exame, net income attributable to shareholders totaled R$ 57.3 million, down 48.7% from R$ 111.7 million in the same period of 2025. Compared to the second quarter, when the company posted a profit of R$ 179.1 million, earnings fell 68.0%.

Part of the shortfall is accounting-related. According to TradeMap, part of the profit drop stemmed from a R$ 49.1 million accounting expense related to equity swaps tied to the company's own shares. Excluding this effect, net income reached R$ 106.4 million, up 3.7% year-over-year. The problem is that even this clean figure failed to salvage the quarter. JPMorgan noted that it came in 30% below the bank's estimate and 40% below the market consensus, reflecting lower-than-expected gross margins. In other words, the market didn't sell off because of the swap; it sold off because operations generated less profit per property.

What Went Wrong with Tenda's Margins?

Tenda began charging less for its properties while experiencing higher cancellation rates. According to Itaú BBA, the core business's adjusted gross margin fell from 39.9% in the second quarter to 34.6% in the third, a 530-basis-point compression. The drop was driven by lower pricing following reductions in unsecured receivables (known as *pro-soluto*), product mix shifts, and cancellations. *Pro-soluto* represents the portion of the property financed directly with the developer rather than through a bank mortgage. By trimming this portion to curb defaults, Tenda lowered prices and sacrificed margin.

On a consolidated basis, BTG Pactual calculates a margin of 32.5%, broken down as follows: (i) an adjusted margin of 34.6% for the Tenda brand; and (ii) a margin of 5.5% for Alea. The company itself reported that third-quarter margins are near the lower end of its operating range.

Contract cancellations are nothing new. They had already surfaced in the October operational update, as we detailed in our analysis of the record land bank and the Caixa strike. What the earnings report newly revealed was the severity of the damage to margins, extending beyond just sales volumes. Genial, for instance, published a report titled "The TCD Cut Weighed on Margins; Price Target Cut to R$ 43," down from its previous target of R$ 49. A lower quarterly margin wouldn't be dramatic if the annual guidance had a comfortable buffer. The problem is that it doesn't.

Can Tenda Meet Its 2026 Profit Target?

Only if the fourth quarter is the strongest of the year—by a wide margin. The company maintained its full-year 2026 profit guidance of R$ 600 million to R$ 660 million. Through the first nine months, profit excluding the swap totaled R$ 419.9 million. To reach the bottom end of the guidance, the company needs another R$ 180.1 million in a single quarter. To reach the top end, it needs R$ 240.1 million.

The math illustrates the scale of the challenge. The floor requires a quarter 69% larger than the third and roughly 12% above 2026's strongest quarter so far, the second. According to BP Money, XP views an ex-swap profit between R$ 180 million and R$ 240 million in Q4 2026 as challenging, sitting well above the R$ 106.5 million reported in Q3 2026. If third-quarter margins represent the new normal, a guidance revision becomes the next risk priced into the stock. Furthermore, the swap agreements could once again distort reported earnings.

Will the Swap Weigh on the Fourth Quarter Again?

All indications point to yes, and potentially more so than this past quarter. The swap contracts track TEND3's share price, and the stock fell roughly 24% between late June and late September. Tenda states that this effect has no cash impact and that the contracts will be settled in April and September 2027. Since late September—when the stock traded near R$ 27 (a value deduced from trading at R$ 19.40 on Nov. 3, which was 28.2% below that level)—the decline has already exceeded 35%. If the stock closes December at that level, the Q4 accounting loss is likely to exceed Q3's. This is our estimate, assuming a proportional impact relative to the stock price decline.

Two points to keep in mind for investors following the stock. First, reported net income will remain disconnected from operational earnings as long as these contracts exist, and it is the ex-swap profit that matters for the guidance. Second, "no cash impact" holds true until settlement. In 2027, what is currently an accounting adjustment turns into real cash—for better or worse—depending on the stock price at that time. In October, the board also approved a share buyback utilizing derivatives, another channel through which the share price can impact results. With all these factors on the table, does holding the stock still make sense?

TEND3: Buy or Sell After the Drop?

Major financial institutions maintain buy ratings, though their price targets vary significantly. JPMorgan kept its buy rating with a price target of R$ 52.50. Goldman Sachs and Itaú BBA also reiterated buy ratings, with price targets of R$ 29 and R$ 58, respectively. On Friday (Nov. 6), according to BTG data, the stock closed at R$ 17.18, up R$ 0.93 (roughly 5.7%), which clawed back only a fraction of the sell-off.

A quick clarification on our part: on the day of the drop, our Nov. 5 article linked the pullback to weak industrial production data released by IBGE. The market close and the reaction from analysis desks demonstrate that the earnings report was actually the primary driver. Our valuation verdict (buy, fair value of R$ 35.97) was calculated on Nov. 4 using fundamentals through Q2 2026. Consequently, it does not yet reflect Q3 margins. It will be recalculated, and the prior range of R$ 14.17 to R$ 68.16 already highlighted wide divergences among valuation methods.

• Revenue grew 10.5% over the year, adjusted EBITDA rose 11.1%, and ex-swap profit continues to expand year-over-year.
• The first-half dividend of R$ 0.6363 per share has already passed its ex-date (Aug. 14), with payment scheduled for Dec. 30. Based on Friday's price, the R$ 1.46 paid over 12 months represents a yield of roughly 8.5%.
• Price targets from JPMorgan and Itaú BBA sit well above the current market price.
• The Tenda brand margin dropped 5.3 percentage points in a single quarter, and management places it near the bottom of its operating range.
• The 2026 guidance requires a record-breaking Q4. A downward revision by the company would likely trigger another sell-off.
• The swap agreement amplifies earnings volatility and will convert to cash items in 2027.

Cancellations tied to Caixa housing programs—which previously dragged down the stock in September, as we covered in our report on the strike that stalled the *Minha Casa, Minha Vida* program—remain a variable outside the company's control. Until the next earnings release, investment decisions hinge on these four metrics: