Sagar Cements Limited (NSE:SAGCEM) Just Reported And Analysts Have Been Lifting Their Price Targets

Sagar Cements Limited (NSE:SAGCEM) shareholders are probably feeling a little disappointed, since its shares fell 7.5% to ₹684 in the week after its latest quarterly results. Sagar Cements reported in line with analyst predictions, delivering revenues of ₹3.6b and statutory earnings per share of ₹12.36, suggesting the business is executing well and in line with its plan. 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.

View our latest analysis for Sagar Cements

After the latest results, the four analysts covering Sagar Cements are now predicting revenues of ₹15.8b in 2022. If met, this would reflect a huge 25% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be ₹59.95, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of ₹15.4b and earnings per share (EPS) of ₹57.70 in 2022. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

It will come as no surprise to learn that the analysts have increased their price target for Sagar Cements 15% to ₹1,041on the back of these upgrades. 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 Sagar Cements analyst has a price target of ₹969 per share, while the most pessimistic values it at ₹710. This is a very narrow spread of estimates, implying either that Sagar Cements is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Sagar Cements' growth to accelerate, with the forecast 25% growth ranking favourably alongside historical growth of 11% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sagar Cements to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Sagar Cements' earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Sagar Cements. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Sagar Cements going out to 2023, and you can see them free on our platform here..

It is also worth noting that we have found 2 warning signs for Sagar Cements that you need to take into consideration.

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This article by Simply Wall St is general in nature. 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.
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