37 Interactive Entertainment Network Technology Group Co., Ltd. (SZSE:002555) 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¥17b, statutory earnings missed forecasts by 17%, coming in at just CN¥1.20 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.
Following the latest results, 37 Interactive Entertainment Network Technology Group's 16 analysts are now forecasting revenues of CN¥19.6b in 2024. This would be a solid 19% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 39% to CN¥1.68. In the lead-up to this report, the analysts had been modelling revenues of CN¥19.6b and earnings per share (EPS) of CN¥1.72 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The average price target fell 12% to CN¥27.10, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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 37 Interactive Entertainment Network Technology Group at CN¥35.00 per share, while the most bearish prices it at CN¥19.40. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting 37 Interactive Entertainment Network Technology Group's growth to accelerate, with the forecast 19% annualised growth to the end of 2024 ranking favourably alongside historical growth of 10.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that 37 Interactive Entertainment Network Technology Group is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for 37 Interactive Entertainment Network Technology Group. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of 37 Interactive Entertainment Network Technology Group's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for 37 Interactive Entertainment Network Technology Group going out to 2026, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for 37 Interactive Entertainment Network Technology Group that you should be aware of.
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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.