Tam Jai International Co. Limited (HKG:2217) missed earnings with its latest full-year results, disappointing overly-optimistic forecasters. Tam Jai International missed earnings this time around, with HK$2.3b revenue coming in 5.3% below what the analysts had modelled. Statutory earnings per share (EPS) of HK$0.17 also fell short of expectations by 15%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Tam Jai International

Following the latest results, Tam Jai International's three analysts are now forecasting revenues of HK$3.29b in 2023. This would be a major 45% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 45% to HK$0.22. In the lead-up to this report, the analysts had been modelling revenues of HK$3.29b and earnings per share (EPS) of HK$0.27 in 2023. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at HK$4.63, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values Tam Jai International at HK$5.11 per share, while the most bearish prices it at HK$4.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. The analysts are definitely expecting Tam Jai International's growth to accelerate, with the forecast 45% annualised growth to the end of 2023 ranking favourably alongside historical growth of 12% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 26% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Tam Jai International to grow faster than the wider industry.

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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Tam Jai International going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 3 warning signs for Tam Jai International that we have uncovered.

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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.