Yahoo Finance Amdocs Limited Just Missed EPS By 6.7%: Here's What Analysts Think Will Happen Next
Amdocs Limited (NASDAQ:DOX) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues of US$1.2b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$1.26, missing estimates by 6.7%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Amdocs after the latest results.
Check out our latest analysis for Amdocs
Following last week's earnings report, Amdocs' six analysts are forecasting 2024 revenues to be US$5.03b, approximately in line with the last 12 months. Statutory earnings per share are predicted to expand 11% to US$5.02. Before this earnings report, the analysts had been forecasting revenues of US$5.04b and earnings per share (EPS) of US$5.53 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$102, 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. The most optimistic Amdocs analyst has a price target of US$113 per share, while the most pessimistic values it at US$90.00. This is a very narrow spread of estimates, implying either that Amdocs is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. We would highlight that Amdocs' revenue growth is expected to slow, with the forecast 1.6% annualised growth rate until the end of 2024 being well below the historical 4.4% 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 9.2% 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 Amdocs.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Amdocs. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Amdocs. 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 Amdocs going out to 2026, and you can see them free on our platform here..
You can also view our analysis of Amdocs' balance sheet, and whether we think Amdocs is carrying too much debt, for free on our platform here.
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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.
