The analysts might have been a bit too bullish on Foxconn Industrial Internet Co., Ltd. (SHSE:601138), given that the company fell short of expectations when it released its full-year results last week. Foxconn Industrial Internet missed analyst forecasts, with revenues of CN¥476b and statutory earnings per share (EPS) of CN¥1.06, falling short by 5.2% and 9.7% respectively. 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 Foxconn Industrial Internet after the latest results.
Taking into account the latest results, the most recent consensus for Foxconn Industrial Internet from 19 analysts is for revenues of CN¥548.9b in 2024. If met, it would imply a decent 15% increase on its revenue over the past 12 months. Per-share earnings are expected to soar 31% to CN¥1.38. In the lead-up to this report, the analysts had been modelling revenues of CN¥596.1b and earnings per share (EPS) of CN¥1.42 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
What's most unexpected is that the consensus price target rose 8.5% to CN¥27.33, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. 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 Foxconn Industrial Internet, with the most bullish analyst valuing it at CN¥34.10 and the most bearish at CN¥20.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Foxconn Industrial Internet shareholders.
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. The analysts are definitely expecting Foxconn Industrial Internet's growth to accelerate, with the forecast 15% annualised growth to the end of 2024 ranking favourably alongside historical growth of 4.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 19% per year. So it's clear that despite the acceleration in growth, Foxconn Industrial Internet is expected to grow meaningfully slower than the industry average.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Foxconn Industrial Internet. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 Foxconn Industrial Internet analysts - going out to 2026, 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 Foxconn Industrial Internet you should know about.
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