Earnings Miss: Aztech Global Ltd. Missed EPS By 23% And Analysts Are Revising Their Forecasts

As you might know, Aztech Global Ltd. (SGX:8AZ) recently reported its yearly numbers. Sales of S$820m surpassed estimates by 3.5%, although statutory earnings per share missed badly, coming in 23% below expectations at S$0.087 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Aztech Global

Taking into account the latest results, the current consensus from Aztech Global's four analysts is for revenues of S$880.9m in 2023, which would reflect an okay 7.4% increase on its sales over the past 12 months. Per-share earnings are expected to jump 56% to S$0.14. Before this earnings report, the analysts had been forecasting revenues of S$917.8m and earnings per share (EPS) of S$0.13 in 2023. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

The average price target increased 8.1% to S$1.03, with the analysts signalling that the improved earnings outlook is more important to the company's valuation than its revenue. 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 Aztech Global at S$1.15 per share, while the most bearish prices it at S$0.91. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. It's pretty clear that there is an expectation that Aztech Global's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 7.4% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% per year. Factoring in the forecast slowdown in growth, it seems obvious that Aztech Global is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Aztech Global following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Still, earnings are more important to the intrinsic value of the business. 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Aztech Global 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 2 warning signs with Aztech Global , and understanding these 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.