Action Construction Equipment Limited (NSE:ACE) Just Reported, And Analysts Assigned A ₹265 Price Target

Investors in Action Construction Equipment Limited (NSE:ACE) had a good week, as its shares rose 3.0% to close at ₹190 following the release of its yearly results. It was a workmanlike result, with revenues of ₹16b coming in 4.4% ahead of expectations, and statutory earnings per share of ₹9.02, in line with analyst appraisals. 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.

Check out our latest analysis for Action Construction Equipment

After the latest results, the twin analysts covering Action Construction Equipment are now predicting revenues of ₹18.1b in 2023. If met, this would reflect a decent 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to step up 19% to ₹10.20. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹18.6b and earnings per share (EPS) of ₹10.44 in 2023. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The consensus price target fell 7.8% to ₹265, with the weaker earnings outlook clearly leading valuation estimates.

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. We can infer from the latest estimates that forecasts expect a continuation of Action Construction Equipment'shistorical trends, as the 11% annualised revenue growth to the end of 2023 is roughly in line with the 10% annual revenue growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 12% per year. So although Action Construction Equipment is expected to maintain its revenue growth rate, it's only growing at about the rate of 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 Action Construction Equipment. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Action Construction Equipment's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

It is also worth noting that we have found 2 warning signs for Action Construction Equipment that you need to take into consideration.

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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.