Earnings Miss: Tam Jai International Co. Limited Missed EPS By 15% And Analysts Are Revising Their Forecasts

Tam Jai International Co. Limited (HKG:2217) missed earnings with its latest full-year results, disappointing overly-optimistic forecasters. Tam Jai International missed earnings this time around, with HK$2.3b revenue coming in 5.3% below what the analysts had modelled. Statutory earnings per share (EPS) of HK$0.17 also fell short of expectations by 15%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Tam Jai International

Taking into account the latest results, the current consensus from Tam Jai International's three analysts is for revenues of HK$3.29b in 2023, which would reflect a substantial 45% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 45% to HK$0.22. In the lead-up to this report, the analysts had been modelling revenues of HK$3.29b and earnings per share (EPS) of HK$0.27 in 2023. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at HK$4.63, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic Tam Jai International analyst has a price target of HK$5.11 per share, while the most pessimistic values it at HK$4.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. It's clear from the latest estimates that Tam Jai International's rate of growth is expected to accelerate meaningfully, with the forecast 45% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 12% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 25% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Tam Jai International is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Tam Jai International. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Tam Jai International going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Tam Jai International .

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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.