Investors in G-bits Network Technology (Xiamen) Co., Ltd. (SHSE:603444) had a good week, as its shares rose 2.2% to close at CN¥177 following the release of its first-quarter results. G-bits Network Technology (Xiamen) missed revenue estimates by 6.0%, coming in atCN¥927m, although statutory earnings per share (EPS) of CN¥3.52 beat expectations, coming in 2.6% ahead of analyst estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following last week's earnings report, G-bits Network Technology (Xiamen)'s 16 analysts are forecasting 2024 revenues to be CN¥3.98b, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 4.5% to CN¥14.22 in the same period. Before this earnings report, the analysts had been forecasting revenues of CN¥4.13b and earnings per share (EPS) of CN¥15.48 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
The consensus price target fell 9.1% to CN¥243, 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. Currently, the most bullish analyst values G-bits Network Technology (Xiamen) at CN¥331 per share, while the most bearish prices it at CN¥191. 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 G-bits Network Technology (Xiamen) shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the G-bits Network Technology (Xiamen)'s past performance and to peers in the same industry. It's pretty clear that there is an expectation that G-bits Network Technology (Xiamen)'s revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.5% growth on an annualised basis. This is compared to a historical growth rate of 19% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 15% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than G-bits Network Technology (Xiamen).
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for G-bits Network Technology (Xiamen). On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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 G-bits Network Technology (Xiamen)'s future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on G-bits Network Technology (Xiamen). Long-term earnings power is much more important than next year's profits. We have forecasts for G-bits Network Technology (Xiamen) going out to 2026, and you can see them free on our platform here.
You can also see our analysis of G-bits Network Technology (Xiamen)'s Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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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.