KEC International Limited Just Recorded A 15% Earnings Beat: Here's What Analysts Think

KEC International Limited (NSE:KEC) just released its second-quarter report and things are looking bullish. KEC International beat revenue and statutory earnings per share (EPS) expectations, with sales hitting ₹33b (15% ahead of estimates) and EPS reaching ₹5.55 (a 3.1% beat). This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for KEC International

After the latest results, the 21 analysts covering KEC International are now predicting revenues of ₹126.1b in 2021. If met, this would reflect a credible 3.2% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to increase 8.7% to ₹23.15. In the lead-up to this report, the analysts had been modelling revenues of ₹124.3b and earnings per share (EPS) of ₹22.36 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of ₹365, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values KEC International at ₹460 per share, while the most bearish prices it at ₹255. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await KEC International shareholders.

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 pretty clear that there is an expectation that KEC International's revenue growth will slow down substantially, with revenues next year expected to grow 3.2%, compared to a historical growth rate of 9.1% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 14% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than KEC International.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around KEC International's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that KEC International's revenues are expected to perform worse than the wider industry. The consensus price target held steady at ₹365, with the latest estimates not enough to have an impact on their price targets.

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 KEC International analysts - going out to 2024, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for KEC International that you need to take into consideration.

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