It's been a good week for Guangzhou Fangbang Electronics Co.,Ltd (SHSE:688020) shareholders, because the company has just released its latest quarterly results, and the shares gained 9.0% to CN¥28.62. Revenues fell badly short of expectations, with revenue of CN¥67m, missing analyst estimates by 40%. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analyst has changed their mind on Guangzhou Fangbang ElectronicsLtd after the latest results.
After the latest results, the lone analyst covering Guangzhou Fangbang ElectronicsLtd are now predicting revenues of CN¥411.0m in 2024. If met, this would reflect a major 22% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Guangzhou Fangbang ElectronicsLtd forecast to report a statutory profit of CN¥0.01 per share. In the lead-up to this report, the analyst had been modelling revenues of CN¥614.0m and earnings per share (EPS) of CN¥0.93 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.
The consensus price target fell 34% to CN¥45.00, with the weaker earnings outlook clearly leading valuation estimates.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Guangzhou Fangbang ElectronicsLtd's rate of growth is expected to accelerate meaningfully, with the forecast 31% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 4.4% p.a. 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 17% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Guangzhou Fangbang ElectronicsLtd is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of Guangzhou Fangbang ElectronicsLtd's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Guangzhou Fangbang ElectronicsLtd. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Guangzhou Fangbang ElectronicsLtd going out as far as 2025, and you can see them free on our platform here.
Even so, be aware that Guangzhou Fangbang ElectronicsLtd is showing 1 warning sign in our investment analysis , you should know about...
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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.