It's been a pretty great week for Ecovacs Robotics Co., Ltd. (SHSE:603486) shareholders, with its shares surging 18% to CN¥49.55 in the week since its latest quarterly results. It was not a great result overall. While revenues of CN¥3.5b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 13% to hit CN¥0.52 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, Ecovacs Robotics' 14 analysts are now forecasting revenues of CN¥17.9b in 2024. This would be a notable 14% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 120% to CN¥2.22. Before this earnings report, the analysts had been forecasting revenues of CN¥18.3b and earnings per share (EPS) of CN¥2.17 in 2024. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.
There's been a 8.3% lift in the price target to CN¥51.81, with the analysts signalling that the higher earnings forecasts are more relevant to the business than the weaker revenue estimates. 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 Ecovacs Robotics, with the most bullish analyst valuing it at CN¥70.00 and the most bearish at CN¥32.00 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Ecovacs Robotics' revenue growth is expected to slow, with the forecast 19% annualised growth rate until the end of 2024 being well below the historical 26% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.6% per year. So it's pretty clear that, while Ecovacs Robotics' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Ecovacs Robotics' earnings potential next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 Ecovacs Robotics analysts - going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Ecovacs Robotics that 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.