Earnings Beat: Metro Brands Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

The investors in Metro Brands Limited's (NSE:METROBRAND) will be rubbing their hands together with glee today, after the share price leapt 32% to ₹763 in the week following its quarterly results. Revenues were ₹5.1b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at ₹3.88, an impressive 21% ahead of estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Metro Brands after the latest results.

View our latest analysis for Metro Brands

Taking into account the latest results, the consensus forecast from Metro Brands' five analysts is for revenues of ₹19.9b in 2023, which would reflect a meaningful 16% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be ₹12.00, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of ₹18.5b and earnings per share (EPS) of ₹10.14 in 2023. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a decent improvement in earnings per share in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 20% to ₹823per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Metro Brands at ₹857 per share, while the most bearish prices it at ₹603. 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 would highlight that Metro Brands' revenue growth is expected to slow, with the forecast 22% annualised growth rate until the end of 2023 being well below the historical 81% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 12% per year. So it's pretty clear that, while Metro Brands' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Metro Brands' earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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. At Simply Wall St, we have a full range of analyst estimates for Metro Brands going out to 2025, and you can see them free on our platform here..

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.