Earnings Report: Stove Kraft Limited Missed Revenue Estimates By 14%

There's been a major selloff in Stove Kraft Limited (NSE:STOVEKRAFT) shares in the week since it released its quarterly report, with the stock down 26% to ₹641. Revenues were ₹3.0b, 14% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of ₹26.33 being in line with what the analyst forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analyst has changed their mind on Stove Kraft after the latest results.

View our latest analysis for Stove Kraft

Taking into account the latest results, the consensus forecast from Stove Kraft's solitary analyst is for revenues of ₹13.2b in 2023, which would reflect a decent 19% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to ascend 15% to ₹23.50. In the lead-up to this report, the analyst had been modelling revenues of ₹14.2b and earnings per share (EPS) of ₹32.40 in 2023. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

The consensus price target fell 12% to ₹950, with the weaker earnings outlook clearly leading valuation estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2023 brings more of the same, according to the analyst, with revenue forecast to display 15% growth on an annualised basis. That is in line with its 16% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 19% annually. So it's pretty clear that Stove Kraft is expected to grow slower than similar companies in the same industry.

The Bottom Line

The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Stove Kraft. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of Stove Kraft's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Stove Kraft going out as far as 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Stove Kraft you should be aware 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.