As you might know, Yealink Network Technology Co., Ltd. (SZSE:300628) recently reported its second-quarter numbers. Results overall were respectable, with statutory earnings of CN¥1.60 per share roughly in line with what the analysts had forecast. Revenues of CN¥1.5b came in 3.5% ahead of analyst predictions. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the eight analysts covering Yealink Network Technology are now predicting revenues of CN¥5.46b in 2024. If met, this would reflect a solid 9.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 7.3% to CN¥1.99. In the lead-up to this report, the analysts had been modelling revenues of CN¥5.38b and earnings per share (EPS) of CN¥1.93 in 2024. So the consensus seems to have become somewhat more optimistic on Yealink Network Technology's earnings potential following these results.
The consensus price target was unchanged at CN¥46.45, 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. The most optimistic Yealink Network Technology analyst has a price target of CN¥48.50 per share, while the most pessimistic values it at CN¥43.57. This is a very narrow spread of estimates, implying either that Yealink Network Technology is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 Yealink Network Technology's rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 17% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Yealink Network Technology is expected to grow at about the same rate as the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Yealink Network Technology's earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 Yealink Network Technology. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Yealink Network Technology going out to 2026, and you can see them free on our platform here..
You still need to take note of risks, for example - Yealink Network Technology has 1 warning sign 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.