Investors in Venustech Group Inc. (SZSE:002439) had a good week, as its shares rose 4.0% to close at CN¥19.65 following the release of its first-quarter results. The results don't look great, especially considering that the analysts had been forecasting a profit and Venustech Group delivered a statutory loss of CN¥0.09 per share. Revenues of CN¥923m did beat expectations by 2.0% though. 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.
Following the latest results, Venustech Group's 19 analysts are now forecasting revenues of CN¥5.43b in 2024. This would be a notable 17% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 38% to CN¥0.79. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥5.56b and earnings per share (EPS) of CN¥0.82 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
Despite the cuts to forecast earnings, there was no real change to the CN¥26.93 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Venustech Group, with the most bullish analyst valuing it at CN¥30.00 and the most bearish at CN¥22.50 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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 Venustech Group's rate of growth is expected to accelerate meaningfully, with the forecast 23% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 12% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 22% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Venustech Group is expected to grow at about the same rate as the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Venustech Group. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Venustech Group going out to 2026, and you can see them free on our platform here.
Even so, be aware that Venustech Group is showing 2 warning signs in our investment analysis , you should know about...
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