Results: Information Services Group, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

Information Services Group, Inc. (NASDAQ:III) last week reported its latest third-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues were US$65m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.07 were also better than expected, beating analyst predictions by 17%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 four analysts covering Information Services Group are now predicting revenues of US$264.4m in 2027. If met, this would reflect a reasonable 4.5% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 8.9% to US$0.27. Before this earnings report, the analysts had been forecasting revenues of US$264.2m and earnings per share (EPS) of US$0.29 in 2027. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Check out our latest analysis for Information Services Group

The consensus price target held steady at US$6.80, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Information Services Group at US$9.00 per share, while the most bearish prices it at US$5.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Information Services Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 3.6% annualised growth until the end of 2027. If achieved, this would be a much better result than the 3.8% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 14% per year. Although Information Services Group's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Information Services Group. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$6.80, 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. At Simply Wall St, we have a full range of analyst estimates for Information Services Group going out to 2028, and you can see them free on our platform here..

It might also be worth considering whether Information Services Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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