Stock Analysis

Five-Star Business Finance Limited (NSE:FIVESTAR) Just Released Its Yearly Earnings: Here's What Analysts Think

NSEI:FIVESTAR
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Investors in Five-Star Business Finance Limited (NSE:FIVESTAR) had a good week, as its shares rose 5.5% to close at ₹738 following the release of its yearly results. Five-Star Business Finance reported ₹17b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of ₹28.39 beat expectations, being 3.0% higher than what the analysts expected. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Five-Star Business Finance

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NSEI:FIVESTAR Earnings and Revenue Growth May 3rd 2024

After the latest results, the nine analysts covering Five-Star Business Finance are now predicting revenues of ₹22.2b in 2025. If met, this would reflect a major 33% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 28% to ₹36.68. In the lead-up to this report, the analysts had been modelling revenues of ₹21.9b and earnings per share (EPS) of ₹34.78 in 2025. So the consensus seems to have become somewhat more optimistic on Five-Star Business Finance's earnings potential following these results.

The consensus price target was unchanged at ₹894, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. Currently, the most bullish analyst values Five-Star Business Finance at ₹1,010 per share, while the most bearish prices it at ₹721. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Five-Star Business Finance'shistorical trends, as the 33% annualised revenue growth to the end of 2025 is roughly in line with the 29% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 21% annually. So although Five-Star Business Finance is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Five-Star Business Finance following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at ₹894, with the latest estimates not enough to have an impact on their price targets.

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 Five-Star Business Finance going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Five-Star Business Finance , and understanding them should be part of your investment process.

Valuation is complex, but we're helping make it simple.

Find out whether Five-Star Business Finance is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.