Earnings Miss: Coda Octopus Group, Inc. Missed EPS By 28% And Analysts Are Revising Their Forecasts

As you might know, Coda Octopus Group, Inc. (NASDAQ:CODA) last week released its latest annual, and things did not turn out so great for shareholders. Results showed a clear earnings miss, with US$19m revenue coming in 9.0% lower than what the analystexpected. Statutory earnings per share (EPS) of US$0.28 missed the mark badly, arriving some 28% below what was expected. Following the result, the analyst has updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.

View our latest analysis for Coda Octopus Group

Taking into account the latest results, Coda Octopus Group's sole analyst currently expect revenues in 2024 to be US$19.6m, approximately in line with the last 12 months. Statutory earnings per share are expected to crater 21% to US$0.22 in the same period. In the lead-up to this report, the analyst had been modelling revenues of US$26.0m and earnings per share (EPS) of US$0.45 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.

The consensus price target fell 25% to US$7.50, with the weaker earnings outlook clearly leading valuation estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. From these estimates it looks as though the analyst expects the years of declining revenue to come to an end, given the flat forecast out to 2024. That would be a definite improvement, given that the past five years have seen revenue shrink 1.2% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.2% per year. Although Coda Octopus Group's revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.

The Bottom Line

The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Coda Octopus Group. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of Coda Octopus Group's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Coda Octopus Group. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Coda Octopus Group going out as far as 2025, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Coda Octopus Group 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.