Celebrations may be in order for Tongcheng Travel Holdings Limited (HKG:780) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.
After the upgrade, the 23 analysts covering Tongcheng Travel Holdings are now predicting revenues of CN¥16b in 2024. If met, this would reflect a sizeable 36% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 28% to CN¥0.88. Prior to this update, the analysts had been forecasting revenues of CN¥14b and earnings per share (EPS) of CN¥0.84 in 2024. The forecasts seem more optimistic now, with a decent improvement in revenue and a small lift in earnings per share estimates.
Despite these upgrades, the analysts have not made any major changes to their price target of CN¥20.93, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Tongcheng Travel Holdings at CN¥25.37 per share, while the most bearish prices it at CN¥15.63. 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 Tongcheng Travel Holdings shareholders.
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. It's clear from the latest estimates that Tongcheng Travel Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 36% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 9.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Tongcheng Travel Holdings to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Tongcheng Travel Holdings.
Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Tongcheng Travel Holdings that suggests the company could be somewhat undervalued. For more information, you can click through to our platform to learn more about our valuation approach.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.