Jyothy Labs Limited Just Missed Earnings - But Analysts Have Updated Their Models

Jyothy Labs Limited (NSE:JYOTHYLAB) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like a pretty bad result, all things considered. Although revenues of ₹5.0b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 47% to hit ₹1.70 per share. 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 Jyothy Labs after the latest results.

Check out our latest analysis for Jyothy Labs

Taking into account the latest results, the most recent consensus for Jyothy Labs from nine analysts is for revenues of ₹19.2b in 2021 which, if met, would be a notable 9.8% increase on its sales over the past 12 months. Per-share earnings are expected to expand 16% to ₹6.00. Before this earnings report, the analysts had been forecasting revenues of ₹18.5b and earnings per share (EPS) of ₹5.44 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice gain to earnings per share in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of ₹166, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Jyothy Labs analyst has a price target of ₹187 per share, while the most pessimistic values it at ₹142. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Jyothy Labs is an easy business to forecast or the the analysts are all using similar assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Jyothy Labs' rate of growth is expected to accelerate meaningfully, with the forecast 9.8% revenue growth noticeably faster than its historical growth of 2.3%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.5% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Jyothy Labs is expected to grow much faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Jyothy Labs following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider 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 Jyothy Labs. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Jyothy Labs going out to 2023, and you can see them free on our platform here..

You still need to take note of risks, for example - Jyothy Labs has 1 warning sign we think you should be aware of.

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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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