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SG Micro Corp Just Missed Earnings - But Analysts Have Updated Their Models

Simply Wall St ·  08/27 06:35

Last week, you might have seen that SG Micro Corp (SZSE:300661) released its quarterly result to the market. The early response was not positive, with shares down 5.6% to CN¥161 in the past week. Sales of CN¥876m surpassed estimates by 7.7%, although statutory earnings per share missed badly, coming in 38% below expectations at CN¥0.41 per share. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for SG Micro

earnings-and-revenue-growthSZSE:300661 Earnings and Revenue Growth August 26th 2022

Taking into account the latest results, the current consensus from SG Micro's 15 analysts is for revenues of CN¥3.49b in 2022, which would reflect a decent 17% increase on its sales over the past 12 months. Per-share earnings are expected to increase 8.6% to CN¥2.98. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥3.41b and earnings per share (EPS) of CN¥3.01 in 2022. There doesn't appear to have been a major change in sentiment following the results, other than the slight bump in revenue estimates.

It may not be a surprise to see thatthe analysts have reconfirmed their price target of CN¥240, implying that the uplift in sales is not expected to greatly contribute to SG Micro's valuation in the near term. 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 SG Micro analyst has a price target of CN¥365 per share, while the most pessimistic values it at CN¥147. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 38% growth on an annualised basis. That is in line with its 39% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 25% annually. So it's pretty clear that SG Micro is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at CN¥240, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on SG Micro. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple SG Micro analysts - going out to 2024, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for SG Micro you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.

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