Shareholders will be ecstatic, with their stake up 38% over the past week following Yue Yuen Industrial (Holdings) Limited's (HKG:551) latest yearly results. Revenues were US$7.9b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.17, an impressive 47% ahead of estimates. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Yue Yuen Industrial (Holdings)'s eleven analysts is for revenues of US$8.37b in 2024. This would reflect a reasonable 6.1% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 5.3% to US$0.18. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$8.61b and earnings per share (EPS) of US$0.17 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.
The average price target rose 14% to HK$11.16, with the analysts signalling that the improved earnings outlook is the key driver of value for shareholders - enough to offset the reduction in 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. Currently, the most bullish analyst values Yue Yuen Industrial (Holdings) at HK$14.20 per share, while the most bearish prices it at HK$8.51. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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. One thing stands out from these estimates, which is that Yue Yuen Industrial (Holdings) is forecast to grow faster in the future than it has in the past, with revenues expected to display 6.1% annualised growth until the end of 2024. If achieved, this would be a much better result than the 4.1% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 9.8% per year. So although Yue Yuen Industrial (Holdings)'s revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Yue Yuen Industrial (Holdings) following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Yue Yuen Industrial (Holdings) going out to 2026, and you can see them free on our platform here.
Even so, be aware that Yue Yuen Industrial (Holdings) is showing 2 warning signs in our investment analysis , 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.