Varroc Engineering Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
It's been a good week for Varroc Engineering Limited (NSE:VARROC) shareholders, because the company has just released its latest second-quarter results, and the shares gained 3.5% to ₹793. Revenue of ₹29b surpassed estimates by 9.2%, although statutory earnings per share missed badly, coming in 68% below expectations at ₹2.15 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Varroc Engineering after the latest results.
Taking into account the latest results, the current consensus from Varroc Engineering's six analysts is for revenues of ₹110.4b in 2027. This would reflect a credible 7.9% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 133% to ₹25.79. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹106.6b and earnings per share (EPS) of ₹25.79 in 2027. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a modest lift to to revenue forecasts.
Check out our latest analysis for Varroc Engineering
Even though revenue forecasts increased, the consensus price target 12% to ₹764, perhaps suggesting thatthe analysts have become more pessimistic about the lack of earnings growth. 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 Varroc Engineering at ₹1,219 per share, while the most bearish prices it at ₹126. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on 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. The analysts are definitely expecting Varroc Engineering's growth to accelerate, with the forecast 16% annualised growth to the end of 2027 ranking favourably alongside historical growth of 0.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Varroc Engineering to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster 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. At Simply Wall St, we have a full range of analyst estimates for Varroc Engineering going out to 2029, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 1 warning sign for Varroc Engineering that you need to be mindful of.
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