Transport Corporation of India Limited Just Recorded A 22% Earnings Beat: Here's What Analysts Think

Last week saw the newest second-quarter earnings release from Transport Corporation of India Limited (NSE:TCI), an important milestone in the company's journey to build a stronger business. Revenue of ₹7.0b beat expectations by an impressive 22%, while statutory earnings per share (EPS) were ₹18.54, in line with estimates. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Transport Corporation of India

Following last week's earnings report, Transport Corporation of India's four analysts are forecasting 2021 revenues to be ₹24.8b, approximately in line with the last 12 months. Per-share earnings are expected to increase 3.9% to ₹14.97. Before this earnings report, the analysts had been forecasting revenues of ₹24.2b and earnings per share (EPS) of ₹13.95 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

It will come as no surprise to learn that the analysts have increased their price target for Transport Corporation of India 21% to ₹270on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Transport Corporation of India at ₹310 per share, while the most bearish prices it at ₹230. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would also point out that the forecast 0.5% revenue decline is better than the historical trend, which saw revenues shrink 11% annually over the past year

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Transport Corporation of India's earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Transport Corporation of India going out to 2023, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Transport Corporation of India that you need to take into consideration.

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