Investors in StarPower Semiconductor Ltd. (SHSE:603290) had a good week, as its shares rose 7.6% to close at CN¥153 following the release of its yearly results. Results were roughly in line with estimates, with revenues of CN¥3.7b and statutory earnings per share of CN¥5.33. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from StarPower Semiconductor's 16 analysts is for revenues of CN¥4.69b in 2024. This reflects a huge 28% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 23% to CN¥6.57. In the lead-up to this report, the analysts had been modelling revenues of CN¥4.93b and earnings per share (EPS) of CN¥6.90 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
The analysts made no major changes to their price target of CN¥223, suggesting the downgrades are not expected to have a long-term impact on StarPower Semiconductor's 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. There are some variant perceptions on StarPower Semiconductor, with the most bullish analyst valuing it at CN¥360 and the most bearish at CN¥150 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. We would highlight that StarPower Semiconductor's revenue growth is expected to slow, with the forecast 28% annualised growth rate until the end of 2024 being well below the historical 38% 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) 23% annually. So it's pretty clear that, while StarPower Semiconductor's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
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. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider 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.
With that in mind, we wouldn't be too quick to come to a conclusion on StarPower Semiconductor. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple StarPower Semiconductor analysts - going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for StarPower Semiconductor you should be aware of, and 1 of them is a bit unpleasant.
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