The analysts might have been a bit too bullish on AVI Limited (JSE:AVI), given that the company fell short of expectations when it released its yearly results last week. AVI missed analyst forecasts, with revenues of R16b and statutory earnings per share (EPS) of R7.60, falling short by 2.0% and 3.3% respectively. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, AVI's five analysts are now forecasting revenues of R16.8b in 2027. This would be a reasonable 3.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 4.4% to R7.98. Yet prior to the latest earnings, the analysts had been anticipated revenues of R17.7b and earnings per share (EPS) of R8.65 in 2027. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
See our latest analysis for AVI
The consensus price target fell 11% to R111, with the weaker earnings outlook clearly leading valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on AVI, with the most bullish analyst valuing it at R128 and the most bearish at R96.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that AVI's revenue growth is expected to slow, with the forecast 3.2% annualised growth rate until the end of 2027 being well below the historical 4.6% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.3% per 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 AVI.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on AVI. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple AVI analysts - going out to 2029, and you can see them free on our platform here.
You still need to take note of risks, for example - AVI has 1 warning sign we think 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.