Earnings Miss: Enghouse Systems Limited Missed EPS By 16% And Analysts Are Revising Their Forecasts

The analysts might have been a bit too bullish on Enghouse Systems Limited (TSE:ENGH), given that the company fell short of expectations when it released its quarterly results last week. Enghouse Systems missed earnings this time around, with CA$126m revenue coming in 3.5% below what the analysts had modelled. Statutory earnings per share (EPS) of CA$0.31 also fell short of expectations by 16%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Following the latest results, Enghouse Systems' three analysts are now forecasting revenues of CA$520.5m in 2026. This would be a satisfactory 4.1% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 9.2% to CA$1.49. In the lead-up to this report, the analysts had been modelling revenues of CA$531.5m and earnings per share (EPS) of CA$1.50 in 2026. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.

See our latest analysis for Enghouse Systems

The average price target was steady at CA$24.33even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. 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. The most optimistic Enghouse Systems analyst has a price target of CA$25.50 per share, while the most pessimistic values it at CA$24.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. The analysts are definitely expecting Enghouse Systems' growth to accelerate, with the forecast 3.3% annualised growth to the end of 2026 ranking favourably alongside historical growth of 0.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. So it's clear that despite the acceleration in growth, Enghouse Systems is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Enghouse Systems. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Enghouse Systems analysts - going out to 2027, and you can see them free on our platform here.

You can also see our analysis of Enghouse Systems' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.