EPL Limited Just Missed EPS By 8.1%: Here's What Analysts Think Will Happen Next

It's been a good week for EPL Limited (NSE:EPL) shareholders, because the company has just released its latest annual results, and the shares gained 5.8% to ₹246. Revenues of ₹31b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at ₹7.57, missing estimates by 8.1%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 EPL

Taking into account the latest results, the consensus forecast from EPL's nine analysts is for revenues of ₹36.4b in 2022, which would reflect a solid 17% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 39% to ₹10.56. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹34.1b and earnings per share (EPS) of ₹10.56 in 2022. There doesn't appear to have been a major change in sentiment following the results, other than the small increase to revenue estimates.

Even though revenue forecasts increased, there was no change to the consensus price target of ₹298, suggesting the analysts are focused on earnings as the driver of value creation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values EPL at ₹331 per share, while the most bearish prices it at ₹266. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that EPL's rate of growth is expected to accelerate meaningfully, with the forecast 17% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 7.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that EPL is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also upgraded their revenue forecasts, although the latest estimates suggest that EPL will grow in line with the overall industry. The consensus price target held steady at ₹298, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on EPL. Long-term earnings power is much more important than next year's profits. We have forecasts for EPL going out to 2023, and you can see them free on our platform here.

You can also see whether EPL is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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