Results: Temenos AG Exceeded Expectations And The Consensus Has Updated Its Estimates
Temenos AG (VTX:TEMN) 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 were US$293m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.92 were also better than expected, beating analyst predictions by 16%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the 15 analysts covering Temenos are now predicting revenues of US$1.26b in 2027. If met, this would reflect a meaningful 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 22% to US$3.80. In the lead-up to this report, the analysts had been modelling revenues of US$1.25b and earnings per share (EPS) of US$3.72 in 2027. So the consensus seems to have become somewhat more optimistic on Temenos' earnings potential following these results.
View our latest analysis for Temenos
There's been no major changes to the consensus price target of CHF83.87, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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 Temenos at CHF102 per share, while the most bearish prices it at CHF54.28. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Temenos' past performance and to peers in the same industry. It's clear from the latest estimates that Temenos' rate of growth is expected to accelerate meaningfully, with the forecast 8.1% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 3.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 10% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Temenos is expected to grow slower than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Temenos' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Temenos' revenue is expected to perform worse than the wider industry. The consensus price target held steady at CHF83.87, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Temenos going out to 2028, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for Temenos you should know about.
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