Carborundum Universal Limited Just Missed EPS By 27%: Here's What Analysts Think Will Happen Next

Investors in Carborundum Universal Limited (NSE:CARBORUNIV) had a good week, as its shares rose 8.8% to close at ₹1,174 following the release of its first-quarter results. Results overall were not great, with earnings of ₹4.04 per share falling drastically short of analyst expectations. Meanwhile revenues hit ₹14b and were slightly better than forecasts. Following the result, the analysts have 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, the consensus forecast from Carborundum Universal's six analysts is for revenues of ₹56.1b in 2027. This reflects a reasonable 3.1% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 109% to ₹22.91. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹54.5b and earnings per share (EPS) of ₹24.32 in 2027. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a reasonable to revenue, the consensus also made a small dip in its earnings per share forecasts.

See our latest analysis for Carborundum Universal

Curiously, the consensus price target rose 5.7% to ₹1,031. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Carborundum Universal at ₹1,111 per share, while the most bearish prices it at ₹940. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Carborundum Universal's revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 4.2% growth on an annualised basis. This is compared to a historical growth rate of 10.0% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. Factoring in the forecast slowdown in growth, it seems obvious that Carborundum Universal is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Carborundum Universal. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Carborundum Universal analysts - going out to 2029, and you can see them free on our platform here.

Even so, be aware that Carborundum Universal is showing 2 warning signs in our investment analysis , you should know about...

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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.