Semiconductor Manufacturing International Corporation (HKG:981) defied analyst predictions to release its second-quarter results, which were ahead of market expectations. The company beat forecasts, with revenue of US$1.9b, some 2.5% above estimates, and statutory earnings per share (EPS) coming in at US$0.02, 130% ahead of expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Taking into account the latest results, the most recent consensus for Semiconductor Manufacturing International from 18 analysts is for revenues of US$7.78b in 2024. If met, it would imply a meaningful 12% increase on its revenue over the past 12 months. Per-share earnings are expected to ascend 15% to US$0.073. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$7.28b and earnings per share (EPS) of US$0.05 in 2024. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a great increase in earnings per share in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of HK$18.60, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Semiconductor Manufacturing International analyst has a price target of HK$24.01 per share, while the most pessimistic values it at HK$10.80. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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 Semiconductor Manufacturing International's growth to accelerate, with the forecast 25% annualised growth to the end of 2024 ranking favourably alongside historical growth of 18% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 13% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Semiconductor Manufacturing International is expected to grow much faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Semiconductor Manufacturing International following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Semiconductor Manufacturing International. 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 Semiconductor Manufacturing International going out to 2026, and you can see them free on our platform here..

Even so, be aware that Semiconductor Manufacturing International is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

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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.