Toromont Industries Ltd. Just Missed EPS By 11%: Here's What Analysts Think Will Happen Next

It's shaping up to be a tough period for Toromont Industries Ltd. (TSE:TIH), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. Toromont Industries missed earnings this time around, with CA$1.0b revenue coming in 6.1% below what the analysts had modelled. Statutory earnings per share (EPS) of CA$1.01 also fell short of expectations by 11%. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Toromont Industries

After the latest results, the eight analysts covering Toromont Industries are now predicting revenues of CA$4.74b in 2024. If met, this would reflect a satisfactory 3.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 2.7% to CA$6.46. In the lead-up to this report, the analysts had been modelling revenues of CA$4.80b and earnings per share (EPS) of CA$6.33 in 2024. So the consensus seems to have become somewhat more optimistic on Toromont Industries' earnings potential following these results.

The consensus price target was unchanged at CA$136, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Toromont Industries, with the most bullish analyst valuing it at CA$145 and the most bearish at CA$125 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Toromont Industries' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.3% growth on an annualised basis. This is compared to a historical growth rate of 5.9% 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 3.1% annually. Even after the forecast slowdown in growth, it seems obvious that Toromont Industries is also expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Toromont Industries' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at CA$136, 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 estimates - from multiple Toromont Industries analysts - going out to 2025, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.