Tecsys Inc. Just Missed Earnings - But Analysts Have Updated Their Models
There's been a notable change in appetite for Tecsys Inc. (TSE:TCS) shares in the week since its quarterly report, with the stock down 11% to CA$52.80. Tecsys beat revenue expectations by 3.8%, recording sales of CA$32m. Statutory earnings per share (EPS) came in at CA$0.12, some 10.0% short of analyst estimates. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Tecsys
Taking into account the latest results, the most recent consensus for Tecsys from five analysts is for revenues of CA$139.1m in 2022 which, if met, would be a decent 19% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 50% to CA$0.59. In the lead-up to this report, the analysts had been modelling revenues of CA$139.1m and earnings per share (EPS) of CA$0.59 in 2022. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 11% to CA$60.40despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Tecsys' earnings by assigning a price premium. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Tecsys, with the most bullish analyst valuing it at CA$70.00 and the most bearish at CA$47.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. The analysts are definitely expecting Tecsys' growth to accelerate, with the forecast 19% growth ranking favourably alongside historical growth of 13% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 21% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Tecsys is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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. We have estimates - from multiple Tecsys analysts - going out to 2025, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for Tecsys that you need to take into consideration.
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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