It's shaping up to be a tough period for Advanced Micro-Fabrication Equipment Inc. China (SHSE:688012), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥1.8b missed by 11%, and statutory earnings per share of CN¥0.43 fell short of forecasts by 44%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Advanced Micro-Fabrication Equipment China after the latest results.
Taking into account the latest results, the current consensus from Advanced Micro-Fabrication Equipment China's 18 analysts is for revenues of CN¥8.73b in 2024. This would reflect a major 21% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 48% to CN¥3.10. Before this earnings report, the analysts had been forecasting revenues of CN¥8.58b and earnings per share (EPS) of CN¥3.18 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥193, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Advanced Micro-Fabrication Equipment China, with the most bullish analyst valuing it at CN¥247 and the most bearish at CN¥148 per share. 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.
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 Advanced Micro-Fabrication Equipment China's growth to accelerate, with the forecast 48% annualised growth to the end of 2024 ranking favourably alongside historical growth of 29% 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 22% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Advanced Micro-Fabrication Equipment China to grow faster than 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 Advanced Micro-Fabrication Equipment China. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue 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 Advanced Micro-Fabrication Equipment China. Long-term earnings power is much more important than next year's profits. We have forecasts for Advanced Micro-Fabrication Equipment China going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Advanced Micro-Fabrication Equipment China you should be aware of.
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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.