It's been a good week for TCNS Clothing Co. Limited (NSE:TCNSBRANDS) shareholders, because the company has just released its latest quarterly results, and the shares gained 3.2% to ₹404. Sales hit ₹1.4b in line with forecasts, although the company reported a statutory loss per share of ₹4.16 that was somewhat smaller than the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the consensus from TCNS Clothing's seven analysts is for revenues of ₹6.64b in 2021, which would reflect an uneasy 11% decline in sales compared to the last year of performance. TCNS Clothing is also expected to turn profitable, with statutory earnings of ₹0.05 per share. In the lead-up to this report, the analysts had been modelling revenues of ₹8.27b and earnings per share (EPS) of ₹3.40 in 2021. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a large cut to earnings per share numbers as well.
The analysts made no major changes to their price target of ₹436, suggesting the downgrades are not expected to have a long-term impact on TCNS Clothing's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic TCNS Clothing analyst has a price target of ₹480 per share, while the most pessimistic values it at ₹369. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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. One thing that stands out from these estimates is that shrinking revenues are expected to moderate from the historical decline of 37% per annum over the past year.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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 held steady at ₹436, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple TCNS Clothing analysts - going out to 2023, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with TCNS Clothing .
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