Pason Systems Inc. Just Missed EPS By 13%: Here's What Analysts Think Will Happen Next
Pason Systems Inc. (TSE:PSI) last week reported its latest full-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was not a great result overall. While revenues of CA$369m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 13% to hit CA$1.21 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Pason Systems after the latest results.
See our latest analysis for Pason Systems
Following the latest results, Pason Systems' six analysts are now forecasting revenues of CA$437.0m in 2024. This would be a solid 18% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 5.8% to CA$1.30. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$437.9m and earnings per share (EPS) of CA$1.46 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at CA$18.43, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic Pason Systems analyst has a price target of CA$21.00 per share, while the most pessimistic values it at CA$15.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Pason Systems shareholders.
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 Pason Systems' rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 5.0% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 11% per year. It seems obvious that as part of the brighter growth outlook, Pason Systems is expected to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Pason Systems. On the plus side, they made no changes to their revenue estimates - and they expect it to perform better than the wider industry. The consensus price target held steady at CA$18.43, with the latest estimates not enough to have an impact on their price targets.
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 Pason Systems going out to 2025, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Pason Systems that you should be aware of.
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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.
