Firstsource Solutions Limited Just Missed Earnings - But Analysts Have Updated Their Models
Last week, you might have seen that Firstsource Solutions Limited (NSE:FSL) released its quarterly result to the market. The early response was not positive, with shares down 7.4% to ₹280 in the past week. Statutory earnings per share fell badly short of expectations, coming in at ₹2.36, some 26% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at ₹28b. 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. 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 Firstsource Solutions' 13 analysts is for revenues of ₹112.6b in 2027. This would reflect a decent 12% increase on its revenue over the past 12 months. Per-share earnings are expected to jump 35% to ₹13.15. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹112.2b and earnings per share (EPS) of ₹13.85 in 2027. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
View our latest analysis for Firstsource Solutions
Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 6.4% to ₹310, suggesting the revised estimates are not indicative of a weaker long-term future for the business. 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 Firstsource Solutions, with the most bullish analyst valuing it at ₹375 and the most bearish at ₹225 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Firstsource Solutions' past performance and to peers in the same industry. It's clear from the latest estimates that Firstsource Solutions' rate of growth is expected to accelerate meaningfully, with the forecast 16% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 12% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Firstsource Solutions 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 Firstsource Solutions. Happily, there were no major changes to revenue forecasts, with the business still 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Firstsource Solutions going out to 2029, and you can see them free on our platform here..
Even so, be aware that Firstsource Solutions is showing 1 warning sign in our investment analysis , you should know about...
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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.