Karooooo Ltd. (NASDAQ:KARO) Second-Quarter Results Just Came Out: Here's What Analysts Are Forecasting For This Year

Karooooo Ltd. (NASDAQ:KARO) investors will be delighted, with the company turning in some strong numbers with its latest results. Results were good overall, with revenues beating analyst predictions by 3.1% to hit R1.3b. Statutory earnings per share (EPS) came in at R7.88, some 2.1% above whatthe analysts had expected. 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.

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After the latest results, the six analysts covering Karooooo are now predicting revenues of R5.43b in 2026. If met, this would reflect a meaningful 8.5% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be R32.69, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of R5.42b and earnings per share (EPS) of R33.76 in 2026. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

View our latest analysis for Karooooo

It might be a surprise to learn that the consensus price target was broadly unchanged at US$59.98, 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 Karooooo at US$63.17 per share, while the most bearish prices it at US$55.84. This is a very narrow spread of estimates, implying either that Karooooo is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. We can infer from the latest estimates that forecasts expect a continuation of Karooooo'shistorical trends, as the 18% annualised revenue growth to the end of 2026 is roughly in line with the 17% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 15% per year. So although Karooooo is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider 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. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$59.98, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for Karooooo going out to 2028, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Karooooo that you need to take into consideration.

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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.