Teradata Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

It's been a good week for Teradata Corporation (NYSE:TDC) shareholders, because the company has just released its latest quarterly results, and the shares gained 4.7% to US$22.65. It looks like a credible result overall - although revenues of US$418m were what the analysts expected, Teradata surprised by delivering a (statutory) profit of US$0.45 per share, an impressive 47% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

We've discovered 2 warning signs about Teradata. View them for free.

Taking into account the latest results, the current consensus, from the ten analysts covering Teradata, is for revenues of US$1.63b in 2025. This implies a discernible 4.1% reduction in Teradata's revenue over the past 12 months. Statutory earnings per share are forecast to decline 12% to US$1.27 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.63b and earnings per share (EPS) of US$1.17 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

See our latest analysis for Teradata

The consensus price target fell 11% to US$26.25, suggesting the increase in earnings forecasts was not enough to offset other the analysts concerns. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Teradata at US$35.00 per share, while the most bearish prices it at US$21.00. 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 Teradata shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. Over the past five years, revenues have declined around 1.4% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 5.4% decline in revenue until the end of 2025. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 12% annually. So while a broad number of companies are forecast to grow, unfortunately Teradata is expected to see its revenue affected worse than other companies in the industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Teradata's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Teradata's revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 estimates - from multiple Teradata analysts - going out to 2027, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with Teradata (including 1 which makes us a bit uncomfortable) .

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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.