Blue Star Limited Just Missed Earnings - But Analysts Have Updated Their Models

Shareholders of Blue Star Limited (NSE:BLUESTARCO) will be pleased this week, given that the stock price is up 12% to ₹1,185 following its latest third-quarter results. Statutory earnings per share of ₹4.89 unfortunately missed expectations by 11%, although it was encouraging to see revenues of ₹22b exceed expectations by 6.0%. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Blue Star

After the latest results, the 19 analysts covering Blue Star are now predicting revenues of ₹113.0b in 2025. If met, this would reflect a huge 26% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to swell 11% to ₹25.87. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹111.5b and earnings per share (EPS) of ₹24.71 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 12% to ₹1,125, suggesting that higher earnings estimates flow through to the stock's valuation as well. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Blue Star at ₹1,305 per share, while the most bearish prices it at ₹770. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. The analysts are definitely expecting Blue Star's growth to accelerate, with the forecast 20% annualised growth to the end of 2025 ranking favourably alongside historical growth of 13% 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 15% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Blue Star 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 Blue Star's 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. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Blue Star going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Blue Star that you need to be mindful of.

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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.