Blue Star Limited Just Missed EPS By 29%: Here's What Analysts Think Will Happen Next
The analysts might have been a bit too bullish on Blue Star Limited (NSE:BLUESTARCO), given that the company fell short of expectations when it released its first-quarter results last week. Results showed a clear earnings miss, with ₹34b revenue coming in 4.8% lower than what the analystsexpected. Statutory earnings per share (EPS) of ₹4.99 missed the mark badly, arriving some 29% below what was expected. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Blue Star's 25 analysts is for revenues of ₹143.9b in 2027. This would reflect a decent 12% increase on its revenue over the past 12 months. Per-share earnings are expected to ascend 14% to ₹28.30. Before this earnings report, the analysts had been forecasting revenues of ₹145.6b and earnings per share (EPS) of ₹32.89 in 2027. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.
Check out our latest analysis for Blue Star
The consensus price target held steady at ₹1,732, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Blue Star analyst has a price target of ₹2,068 per share, while the most pessimistic values it at ₹1,341. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2027 brings more of the same, according to the analysts, with revenue forecast to display 17% growth on an annualised basis. That is in line with its 19% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 14% annually. So although Blue Star is expected to maintain its revenue growth rate, it's only growing at about the rate of 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 Blue Star. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 in mind, we wouldn't be too quick to come to a conclusion on Blue Star. Long-term earnings power is much more important than next year's profits. We have forecasts for Blue Star going out to 2029, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Blue Star , and understanding this should be part of your investment process.
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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.