Trent Limited (NSE:TRENT) Beat Earnings, And Analysts Have Been Reviewing Their Forecasts

Trent Limited (NSE:TRENT) just released its first-quarter report and things are looking bullish. The company beat expectations with revenues of ₹41b arriving 7.1% ahead of forecasts. Statutory earnings per share (EPS) were ₹11.04, 7.6% ahead of estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Trent

After the latest results, the twelve analysts covering Trent are now predicting revenues of ₹182.7b in 2025. If met, this would reflect a huge 32% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to rise 7.7% to ₹51.66. Before this earnings report, the analysts had been forecasting revenues of ₹175.0b and earnings per share (EPS) of ₹44.72 in 2025. So it seems there's been a definite increase in optimism about Trent's future following the latest results, with a nice increase in the earnings per share forecasts in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 17% to ₹5,645per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Trent, with the most bullish analyst valuing it at ₹7,401 and the most bearish at ₹3,195 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. The analysts are definitely expecting Trent's growth to accelerate, with the forecast 45% annualised growth to the end of 2025 ranking favourably alongside historical growth of 36% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 20% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Trent 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 Trent's 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. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Trent going out to 2027, and you can see them free on our platform here.

Even so, be aware that Trent is showing 1 warning sign in our investment analysis , you should know about...

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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.