Shareholders might have noticed that H World Group Limited (NASDAQ:HTHT) filed its full-year result this time last week. The early response was not positive, with shares down 3.8% to US$37.22 in the past week. It was a credible result overall, with revenues of CN¥22b and statutory earnings per share of CN¥12.55 both in line with analyst estimates, showing that H World Group is executing in line with expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for H World Group from 16 analysts is for revenues of CN¥24.1b in 2024. If met, it would imply a solid 10% increase on its revenue over the past 12 months. Statutory per share are forecast to be CN¥12.92, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of CN¥23.4b and earnings per share (EPS) of CN¥13.45 in 2024. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a solid to revenue, the consensus also made a minor downgrade to its earnings per share forecasts.
There's been no major changes to the price target of US$53.05, suggesting that the impact of higher forecast revenue and lower earnings won't result in a meaningful change to the business' valuation. 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 H World Group analyst has a price target of US$64.00 per share, while the most pessimistic values it at US$39.89. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the H World Group's past performance and to peers in the same industry. We would highlight that H World Group's revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2024 being well below the historical 14% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.8% annually. So it's pretty clear that, while H World Group's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for H World Group. They also upgraded their revenue forecasts, although the latest estimates suggest that H World Group will grow in line with the overall industry. 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for H World Group going out to 2026, and you can see them free on our platform here..
Even so, be aware that H World Group is showing 1 warning sign 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.