Investors in Stella International Holdings Limited (HKG:1836) had a good week, as its shares rose 6.1% to close at HK$14.72 following the release of its half-year results. It looks like a credible result overall - although revenues of US$770m were in line with what the analysts predicted, Stella International Holdings surprised by delivering a statutory profit of US$0.11 per share, a notable 12% above expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Stella International Holdings after the latest results.
Taking into account the latest results, Stella International Holdings' seven analysts currently expect revenues in 2024 to be US$1.55b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$0.22, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$1.56b and earnings per share (EPS) of US$0.21 in 2024. So the consensus seems to have become somewhat more optimistic on Stella International Holdings' earnings potential following these results.
There's been no major changes to the consensus price target of HK$16.57, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's 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 Stella International Holdings, with the most bullish analyst valuing it at HK$19.57 and the most bearish at HK$11.00 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Stella International Holdings' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.1% growth on an annualised basis. This is compared to a historical growth rate of 2.2% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.7% annually. Factoring in the forecast slowdown in growth, it seems obvious that Stella International Holdings 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 Stella International Holdings' 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 Stella International Holdings' revenue is expected to perform worse 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Stella International Holdings analysts - going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Stella International Holdings has 2 warning signs we think 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.