Earnings Miss: Computer Age Management Services Limited Missed EPS By 6.8% And Analysts Are Revising Their Forecasts

Last week, you might have seen that Computer Age Management Services Limited (NSE:CAMS) released its first-quarter result to the market. The early response was not positive, with shares down 5.1% to ₹2,329 in the past week. It looks like the results were a bit of a negative overall. While revenues of ₹2.4b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 6.8% to hit ₹13.14 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Computer Age Management Services

Taking into account the latest results, the current consensus from Computer Age Management Services' six analysts is for revenues of ₹9.91b in 2023, which would reflect an okay 4.9% increase on its sales over the past 12 months. Statutory earnings per share are predicted to rise 5.3% to ₹62.06. Before this earnings report, the analysts had been forecasting revenues of ₹9.96b and earnings per share (EPS) of ₹63.66 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

The consensus price target held steady at ₹2,613, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Computer Age Management Services, with the most bullish analyst valuing it at ₹2,901 and the most bearish at ₹2,050 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Computer Age Management Services' revenue growth is expected to slow, with the forecast 6.6% annualised growth rate until the end of 2023 being well below the historical 11% p.a. growth over the last three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 10% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Computer Age Management Services.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Computer Age Management Services' revenues are expected to perform worse than the wider industry. The consensus price target held steady at ₹2,613, with the latest estimates not enough to have an impact on their price targets.

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 estimates - from multiple Computer Age Management Services analysts - going out to 2025, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Computer Age Management Services , and understanding this should be part of your investment process.

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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.