Jamna Auto Industries Limited (NSE:JAMNAAUTO) missed earnings with its latest quarterly results, disappointing overly-optimistic analysts. Unfortunately, Jamna Auto Industries delivered a serious earnings miss. Revenues of ₹2.4b were 17% below expectations, and earnings per share of ₹0.16 missed estimates by 20%. 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. We've gathered the most recent forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus, from the four analysts covering Jamna Auto Industries, is for revenues of ₹13.5b in 2020, which would reflect a concerning 20% reduction in Jamna Auto Industries's sales over the past 12 months. Earnings per share are expected to sink 10% to ₹2.00 in the same period. Before this earnings report, analysts had been forecasting revenues of ₹19.4b and earnings per share (EPS) of ₹2.55 in 2020. Indeed, we can see that analysts are a lot more bearish about Jamna Auto Industries's prospects following the latest results, administering a large cut to revenue estimates and slashing their EPS estimates to boot.
The average price target climbed 6.3% to ₹55.25 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. 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 Jamna Auto Industries at ₹74.00 per share, while the most bearish prices it at ₹38.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Further, we can compare these estimates to past performance, and see how Jamna Auto Industries forecasts compare to the wider market's forecast performance. We would highlight that sales are expected to reverse, with the forecast 20% revenue decline a notable change from historical growth of 16% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 11% next year. It's pretty clear that Jamna Auto Industries's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The biggest highlight of the new consensus is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Jamna Auto Industries. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Jamna Auto Industries going out to 2021, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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