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Earnings Miss: KEC International Limited Missed EPS By 76% And Analysts Are Revising Their Forecasts
The analysts might have been a bit too bullish on KEC International Limited (NSE:KEC), given that the company fell short of expectations when it released its second-quarter results last week. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of ₹55b missed by 11%, and statutory earnings per share of ₹1.12 fell short of forecasts by 76%. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, KEC International's 25 analysts are now forecasting revenues of ₹259.9b in 2027. This would be a decent 13% improvement in revenue compared to the last 12 months. Per-share earnings are expected to expand 17% to ₹18.53. In the lead-up to this report, the analysts had been modelling revenues of ₹259.9b and earnings per share (EPS) of ₹25.28 in 2027. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.
View our latest analysis for KEC International
It might be a surprise to learn that the consensus price target was broadly unchanged at ₹513, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values KEC International at ₹635 per share, while the most bearish prices it at ₹318. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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 clear from the latest estimates that KEC International's rate of growth is expected to accelerate meaningfully, with the forecast 29% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 12% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 13% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect KEC International to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for KEC International. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at ₹513, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple KEC International analysts - going out to 2029, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for KEC International (1 makes us a bit uncomfortable!) that we have uncovered.
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