VEEM Ltd Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

VEEM Ltd (ASX:VEE) shareholders are probably feeling a little disappointed, since its shares fell 5.4% to AU$1.22 in the week after its latest annual results. VEEM beat revenue expectations by 6.3%, recording sales of AU$60m. Statutory earnings per share (EPS) came in at AU$0.037, some 5.1% short of analyst estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on VEEM after the latest results.

View our latest analysis for VEEM

Following the latest results, VEEM's two analysts are now forecasting revenues of AU$61.3m in 2022. This would be a credible 3.0% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 8.1% to AU$0.04. In the lead-up to this report, the analysts had been modelling revenues of AU$63.0m and earnings per share (EPS) of AU$0.057 in 2022. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the AU$1.41 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that VEEM's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 3.0% growth on an annualised basis. This is compared to a historical growth rate of 6.2% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 29% per year. Factoring in the forecast slowdown in growth, it seems obvious that VEEM is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at AU$1.41, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on VEEM. Long-term earnings power is much more important than next year's profits. We have analyst estimates for VEEM going out as far as 2024, and you can see them free on our platform here.

It might also be worth considering whether VEEM's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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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