Investors in Prism Johnson Limited (NSE:PRSMJOHNSN) had a good week, as its shares rose 4.2% to close at ₹115 following the release of its full-year results. Sales of ₹63b surpassed estimates by 2.5%, although statutory earnings per share missed badly, coming in 37% below expectations at ₹1.82 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the four analysts covering Prism Johnson are now predicting revenues of ₹70.2b in 2023. If met, this would reflect a solid 11% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 67% to ₹3.05. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹68.8b and earnings per share (EPS) of ₹5.24 in 2023. While next year's revenue estimates increased, there was also a pretty serious reduction to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
The consensus price target fell 5.1% to ₹142, suggesting that the analysts are primarily focused on earnings as the driver of value for this business. 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 Prism Johnson at ₹172 per share, while the most bearish prices it at ₹123. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Prism Johnson shareholders.
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. It's clear from the latest estimates that Prism Johnson's rate of growth is expected to accelerate meaningfully, with the forecast 11% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 2.2% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 11% per year. Prism Johnson is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Prism Johnson. They also upgraded their revenue forecasts, although the latest estimates suggest that Prism Johnson will grow in line with the overall industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Prism Johnson's future valuation.
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 estimates - from multiple Prism Johnson analysts - going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Prism Johnson (1 makes us a bit uncomfortable!) that we have uncovered.
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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.