V-Guard Industries Limited (NSE:VGUARD) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year’s forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
Following the upgrade, the most recent consensus for V-Guard Industries from its two analysts is for revenues of ₹27b in 2021 which, if met, would be a solid 13% increase on its sales over the past 12 months. Statutory earnings per share are presumed to leap 29% to ₹4.95. Before this latest update, the analysts had been forecasting revenues of ₹24b and earnings per share (EPS) of ₹3.60 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
It will come as no surprise to learn that the analysts have increased their price target for V-Guard Industries 12% to ₹213 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic V-Guard Industries analyst has a price target of ₹276 per share, while the most pessimistic values it at ₹172. 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 V-Guard Industries 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 V-Guard Industries’ rate of growth is expected to accelerate meaningfully, with the forecast 13% revenue growth noticeably faster than its historical growth of 5.8% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 17% next year. It seems obvious that, while the future growth outlook is brighter than the recent past, V-Guard Industries is expected to grow slower than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at V-Guard Industries.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have analyst estimates for V-Guard Industries going out as far as 2023, and you can see them free on our platform…
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