Investors in Amdocs Limited (NASDAQ:DOX) had a good week, as its shares rose 8.0% to close at US$62.11 following the release of its full-year results. Amdocs reported in line with analyst predictions, delivering revenues of US$4.2b and statutory earnings per share of US$3.71, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from Amdocs' five analysts is for revenues of US$4.37b in 2021, which would reflect a reasonable 4.8% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to rise 8.0% to US$4.06. Before this earnings report, the analysts had been forecasting revenues of US$4.28b and earnings per share (EPS) of US$3.91 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Despite these upgrades,the analysts have not made any major changes to their price target of US$75.71, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Amdocs at US$80.00 per share, while the most bearish prices it at US$67.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Amdocs' rate of growth is expected to accelerate meaningfully, with the forecast 4.8% revenue growth noticeably faster than its historical growth of 2.9%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 13% next year. So it's clear that despite the acceleration in growth, Amdocs is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Amdocs following these results. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Amdocs analysts - going out to 2022, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Amdocs that you need to take into consideration.
This article by Simply Wall St is general in nature. 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.
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