This Analyst Just Downgraded Their Ramco Systems Limited (NSE:RAMCOSYS) EPS Forecasts

One thing we could say about the covering analyst on Ramco Systems Limited (NSE:RAMCOSYS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from Ramco Systems' lone analyst is for revenues of ₹5.5b in 2024, which would reflect a reasonable 4.8% improvement in sales compared to the last 12 months. Losses are presumed to reduce, shrinking 12% per share from last year to ₹71.80. Yet before this consensus update, the analyst had been forecasting revenues of ₹6.1b and losses of ₹39.60 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Ramco Systems

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that Ramco Systems is forecast to grow faster in the future than it has in the past, with revenues expected to display 9.9% annualised growth until the end of 2024. If achieved, this would be a much better result than the 1.6% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 15% per year. So although Ramco Systems' revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the serious cut to this year's outlook, it's clear that the analyst has turned more bearish on Ramco Systems, and we wouldn't blame shareholders for feeling a little more cautious themselves.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Ramco Systems' business, like a short cash runway. For more information, you can click here to discover this and the 2 other flags we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.