EVE Energy Co., Ltd. (SZSE:300014) missed earnings with its latest full-year results, disappointing overly-optimistic forecasters. EVE Energy missed analyst forecasts, with revenues of CN¥49b and statutory earnings per share (EPS) of CN¥1.97, falling short by 2.4% and 6.0% respectively. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, EVE Energy's 18 analysts are now forecasting revenues of CN¥55.9b in 2024. This would be a solid 15% improvement in revenue compared to the last 12 months. Per-share earnings are expected to step up 14% to CN¥2.26. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥63.9b and earnings per share (EPS) of CN¥2.66 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a substantial drop in earnings per share numbers as well.
Despite the cuts to forecast earnings, there was no real change to the CN¥48.54 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. Currently, the most bullish analyst values EVE Energy at CN¥80.00 per share, while the most bearish prices it at CN¥20.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. 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.
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 EVE Energy's revenue growth is expected to slow, with the forecast 15% annualised growth rate until the end of 2024 being well below the historical 49% 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 18% 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 EVE Energy.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for EVE Energy. 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 EVE Energy. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple EVE Energy analysts - going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with EVE Energy , and understanding them should be part of your investment process.
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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.