It's been a pretty great week for Kingsoft Corporation Limited (HKG:3888) shareholders, with its shares surging 13% to HK$25.00 in the week since its latest full-year results. It looks like the results were a bit of a negative overall. While revenues of CN¥8.5b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 7.4% to hit CN¥0.34 per share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

After the latest results, the 14 analysts covering Kingsoft are now predicting revenues of CN¥9.82b in 2024. If met, this would reflect a notable 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 110% to CN¥0.78. In the lead-up to this report, the analysts had been modelling revenues of CN¥10.0b and earnings per share (EPS) of CN¥0.89 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the HK$34.48 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Kingsoft analyst has a price target of HK$39.83 per share, while the most pessimistic values it at HK$26.89. 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 Kingsoft shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Kingsoft's growth to accelerate, with the forecast 15% annualised growth to the end of 2024 ranking favourably alongside historical growth of 11% 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, Kingsoft is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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. 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 Kingsoft. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Kingsoft going out to 2026, and you can see them free on our platform here..

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.