Glodon Company Limited (SZSE:002410) missed earnings with its latest full-year results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥6.5b, statutory earnings missed forecasts by an incredible 81%, coming in at just CN¥0.07 per share. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from Glodon's 26 analysts is for revenues of CN¥7.05b in 2024. This reflects a satisfactory 7.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 386% to CN¥0.34. Before this earnings report, the analysts had been forecasting revenues of CN¥8.08b and earnings per share (EPS) of CN¥0.61 in 2024. Indeed, we can see that the analysts are a lot more bearish about Glodon's prospects following the latest results, administering a real cut to revenue estimates and slashing their EPS estimates to boot.
The consensus price target fell 12% to CN¥19.87, with the weaker earnings outlook clearly leading valuation estimates. 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 Glodon analyst has a price target of CN¥48.86 per share, while the most pessimistic values it at CN¥11.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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.
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. We would highlight that Glodon's revenue growth is expected to slow, with the forecast 7.7% annualised growth rate until the end of 2024 being well below the historical 19% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 22% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Glodon.
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. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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. We have estimates - from multiple Glodon analysts - going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Glodon that we have uncovered.
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