Newgen Software Technologies Limited Just Recorded A 28% EPS Beat: Here's What Analysts Are Forecasting Next

Newgen Software Technologies Limited (NSE:NEWGEN) shareholders are probably feeling a little disappointed, since its shares fell 5.3% to ₹1,244 in the week after its latest second-quarter results. It looks like a credible result overall - although revenues of ₹3.6b were what the analysts expected, Newgen Software Technologies surprised by delivering a (statutory) profit of ₹5.03 per share, an impressive 28% above what was forecast. 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. 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 Newgen Software Technologies

Taking into account the latest results, the current consensus from Newgen Software Technologies' four analysts is for revenues of ₹15.5b in 2025. This would reflect a meaningful 13% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 7.4% to ₹22.38. Before this earnings report, the analysts had been forecasting revenues of ₹15.6b and earnings per share (EPS) of ₹22.38 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The consensus price target rose 23% to ₹1,410despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Newgen Software Technologies' earnings by assigning a price premium. 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. Currently, the most bullish analyst values Newgen Software Technologies at ₹1,500 per share, while the most bearish prices it at ₹1,260. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Newgen Software Technologies is an easy business to forecast or the the analysts are all using similar assumptions.

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 Newgen Software Technologies' growth to accelerate, with the forecast 28% annualised growth to the end of 2025 ranking favourably alongside historical growth of 17% 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 15% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Newgen Software Technologies to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Newgen Software Technologies going out to 2027, 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 2 warning signs with Newgen Software Technologies (at least 1 which is significant) , and understanding them 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.