Results: Oracle Financial Services Software Limited Beat Earnings Expectations And Analysts Now Have New Forecasts

Shareholders might have noticed that Oracle Financial Services Software Limited (NSE:OFSS) filed its quarterly result this time last week. The early response was not positive, with shares down 2.9% to ₹3,219 in the past week. The result was positive overall - although revenues of ₹12b were in line with what the analysts predicted, Oracle Financial Services Software surprised by delivering a statutory profit of ₹49.76 per share, modestly greater than expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Oracle Financial Services Software after the latest results.

Check out our latest analysis for Oracle Financial Services Software

Taking into account the latest results, the current consensus from Oracle Financial Services Software's dual analysts is for revenues of ₹56.8b in 2022, which would reflect a notable 13% increase on its sales over the past 12 months. Statutory earnings per share are predicted to ascend 19% to ₹217. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹57.7b and earnings per share (EPS) of ₹216 in 2022. 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.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 30% to ₹4,000. It looks as though they previously had some doubts over whether the business would live up to their expectations.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Oracle Financial Services Software's rate of growth is expected to accelerate meaningfully, with the forecast 13% revenue growth noticeably faster than its historical growth of 3.9%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% next year. Oracle Financial Services Software is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall 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.

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. We have analyst estimates for Oracle Financial Services Software going out as far as 2023, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Oracle Financial Services Software that you need to be mindful of.

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