Tata Consultancy Services Limited Just Missed Earnings - But Analysts Have Updated Their Models

Shareholders might have noticed that Tata Consultancy Services Limited (NSE:TCS) filed its quarterly result this time last week. The early response was not positive, with shares down 2.4% to ₹4,149 in the past week. Revenues of ₹643b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at ₹32.92, missing estimates by 5.4%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Tata Consultancy Services

Taking into account the latest results, the most recent consensus for Tata Consultancy Services from 45 analysts is for revenues of ₹2.58t in 2025. If met, it would imply a credible 3.7% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 5.2% to ₹138. Before this earnings report, the analysts had been forecasting revenues of ₹2.59t and earnings per share (EPS) of ₹141 in 2025. 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.

It might be a surprise to learn that the consensus price target was broadly unchanged at ₹4,482, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Tata Consultancy Services at ₹5,710 per share, while the most bearish prices it at ₹3,050. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Tata Consultancy Services shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Tata Consultancy Services' past performance and to peers in the same industry. We would highlight that Tata Consultancy Services' revenue growth is expected to slow, with the forecast 7.6% annualised growth rate until the end of 2025 being well below the historical 11% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.7% annually. So it's pretty clear that, while Tata Consultancy Services' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Tata Consultancy Services. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Tata Consultancy Services analysts - going out to 2027, and you can see them free on our platform here.

You can also see our analysis of Tata Consultancy Services' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.