Goertek Inc. (SZSE:002241) shareholders are probably feeling a little disappointed, since its shares fell 2.2% to CN¥20.09 in the week after its latest quarterly results. Revenues of CN¥21b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of CN¥0.25 an impressive 37% ahead of estimates. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Taking into account the latest results, the consensus forecast from Goertek's 17 analysts is for revenues of CN¥99.9b in 2024. This reflects a satisfactory 6.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 39% to CN¥0.78. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥98.8b and earnings per share (EPS) of CN¥0.73 in 2024. So the consensus seems to have become somewhat more optimistic on Goertek's earnings potential following these results.

The consensus price target was unchanged at CN¥21.50, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. There are some variant perceptions on Goertek, with the most bullish analyst valuing it at CN¥29.26 and the most bearish at CN¥14.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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 pretty clear that there is an expectation that Goertek's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 14% growth on an annualised basis. This is compared to a historical growth rate of 23% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% per year. Factoring in the forecast slowdown in growth, it seems obvious that Goertek is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Goertek's 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 Goertek's revenue is expected to perform worse than the wider industry. The consensus price target held steady at CN¥21.50, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Goertek going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Goertek that you need to take into consideration.

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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.