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Earnings Miss: IDOX plc Missed EPS By 35% And Analysts Are Revising Their Forecasts

It's been a good week for IDOX plc (LON:IDOX) shareholders, because the company has just released its latest annual results, and the shares gained 5.4% to UK£0.66. Statutory earnings per share fell badly short of expectations, coming in at UK£0.012, some 35% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at UK£73m. 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.

See our latest analysis for IDOX

earnings-and-revenue-growth
earnings-and-revenue-growth

After the latest results, the four analysts covering IDOX are now predicting revenues of UK£88.8m in 2024. If met, this would reflect a huge 21% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 27% to UK£0.016. Before this earnings report, the analysts had been forecasting revenues of UK£85.9m and earnings per share (EPS) of UK£0.022 in 2024. While next year's revenue estimates increased, there was also a large cut to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.

Curiously, the consensus price target rose 12% to UK£0.83. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings. 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. The most optimistic IDOX analyst has a price target of UK£0.85 per share, while the most pessimistic values it at UK£0.80. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the IDOX's past performance and to peers in the same industry. It's clear from the latest estimates that IDOX's rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 1.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.2% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that IDOX is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for IDOX. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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.

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 forecasts for IDOX going out to 2026, and you can see them free on our platform here.

You can also view our analysis of IDOX's balance sheet, and whether we think IDOX is carrying too much debt, for free on our platform here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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