The analysts might have been a bit too bullish on B-SOFT Co.,Ltd. (SZSE:300451), given that the company fell short of expectations when it released its annual results last week. Results look to have been somewhat negative - revenue fell 4.9% short of analyst estimates at CN¥1.9b, and statutory earnings of CN¥0.27 per share missed forecasts by 5.3%. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for B-SOFTLtd

After the latest results, the four analysts covering B-SOFTLtd are now predicting revenues of CN¥2.28b in 2022. If met, this would reflect a huge 20% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 33% to CN¥0.36. Before this earnings report, the analysts had been forecasting revenues of CN¥2.58b and earnings per share (EPS) of CN¥0.37 in 2022. Indeed, we can see that sentiment has declined measurably after results came out, with a real cut to revenue estimates and a minor downgrade to EPS estimates to boot.

The average price target climbed 11% to CN¥13.09despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. 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. Currently, the most bullish analyst values B-SOFTLtd at CN¥14.17 per share, while the most bearish prices it at CN¥12.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting B-SOFTLtd's growth to accelerate, with the forecast 20% annualised growth to the end of 2022 ranking favourably alongside historical growth of 17% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 17% annually. B-SOFTLtd is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for B-SOFTLtd. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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 in mind, we wouldn't be too quick to come to a conclusion on B-SOFTLtd. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for B-SOFTLtd going out to 2023, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 1 warning sign for B-SOFTLtd you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.