$Yatsen (YSG.US)$ defied analyst predictions to release its quarterly results, which were ahead of market expectations. Yatsen Holding beat expectations with revenues of CN¥858m arriving 6.4% ahead of forecasts. The company also reported a statutory loss of CN¥0.37, 5.1% smaller than was expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Yatsen Holding after the latest results.
See our latest analysis for Yatsen Holding
NYSE:YSG Earnings and Revenue Growth November 25th 2022
Taking into account the latest results, Yatsen Holding's four analysts currently expect revenues in 2023 to be CN¥4.16b, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 41% to CN¥1.30. Before this latest report, the consensus had been expecting revenues of CN¥4.33b and CN¥0.91 per share in losses. While next year's revenue estimates dropped there was also a massive increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The average price target was broadly unchanged at US$1.27, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Yatsen Holding at US$1.50 per share, while the most bearish prices it at US$0.90. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 1.3% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 13% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.4% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Yatsen Holding is expected to lag the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Yatsen Holding. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 Yatsen Holding. Long-term earnings power is much more important than next year's profits. We have forecasts for Yatsen Holding 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 2 warning signs for Yatsen Holding you should know about.
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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.