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WNS (Holdings) Limited (NYSE:WNS) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 5.2% to hit US$225m. WNS (Holdings) also reported a statutory profit of US$0.60, which was an impressive 49% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on WNS (Holdings) after the latest results.
Taking into account the latest results, the current consensus from WNS (Holdings)'s ten analysts is for revenues of US$961.6m in 2022, which would reflect a modest 4.8% increase on its sales over the past 12 months. Per-share earnings are expected to increase 4.7% to US$2.20. In the lead-up to this report, the analysts had been modelling revenues of US$942.1m and earnings per share (EPS) of US$2.19 in 2022. There doesn't appear to have been a major change in sentiment following the results, other than the modest lift to revenue estimates.
Even though revenue forecasts increased, there was no change to the consensus price target of US$80.00, suggesting the analysts are focused on earnings as the driver of value creation. 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. There are some variant perceptions on WNS (Holdings), with the most bullish analyst valuing it at US$85.00 and the most bearish at US$70.00 per share. This is a very narrow spread of estimates, implying either that WNS (Holdings) is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. We would highlight that WNS (Holdings)'s revenue growth is expected to slow, with forecast 4.8% increase next year well below the historical 11%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 14% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than WNS (Holdings).
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse 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.
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 WNS (Holdings) going out to 2025, and you can see them free on our platform here..
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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