Revenue Beat: TECOM Group PJSC Exceeded Revenue Forecasts By 15% And Analysts Are Updating Their Estimates

A week ago, TECOM Group PJSC (DFM:TECOM) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was a positive result, with revenues and statutory earnings per share (EPS) both performing well. Revenues were 15% higher than the analysts had forecast, at د.إ514m, while EPS of د.إ0.05 beat analyst models by 9.8%. 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 TECOM Group PJSC after the latest results.

See our latest analysis for TECOM Group PJSC

Taking into account the latest results, the most recent consensus for TECOM Group PJSC from three analysts is for revenues of د.إ2.18b in 2023 which, if met, would be a decent 9.0% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 54% to د.إ0.24. In the lead-up to this report, the analysts had been modelling revenues of د.إ1.92b and earnings per share (EPS) of د.إ0.30 in 2023. Although revenues are expected to increase meaningfully, the analysts have acknowledged the cost of growth, given the substantial drop in EPS estimates following the latest report.

There's been no major changes to the price target of د.إ2.93, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic TECOM Group PJSC analyst has a price target of د.إ3.14 per share, while the most pessimistic values it at د.إ2.56. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting TECOM Group PJSC's growth to accelerate, with the forecast 12% annualised growth to the end of 2023 ranking favourably alongside historical growth of 9.9% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.1% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect TECOM Group PJSC to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for TECOM Group PJSC. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at د.إ2.93, with the latest estimates not enough to have an impact on their price targets.

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 TECOM Group PJSC going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for TECOM Group PJSC you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.