Goertek Inc. (SZSE:002241) just released its latest first-quarter report and things are not looking great. Results showed a clear earnings miss, with CN¥19b revenue coming in 9.6% lower than what the analystsexpected. Statutory earnings per share (EPS) of CN¥0.11 missed the mark badly, arriving some 27% below what was expected. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Goertek from 18 analysts is for revenues of CN¥99.0b in 2024. If met, it would imply a modest 5.6% increase on its revenue over the past 12 months. Per-share earnings are expected to leap 89% to CN¥0.76. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥102.1b and earnings per share (EPS) of CN¥0.69 in 2024. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the substantial gain in to the earnings per share numbers.
The consensus has made no major changes to the price target of CN¥17.42, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Goertek, with the most bullish analyst valuing it at CN¥27.30 and the most bearish at CN¥12.00 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.
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. It's pretty clear that there is an expectation that Goertek's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.5% growth on an annualised basis. This is compared to a historical growth rate of 26% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 17% 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 Goertek.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Goertek following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Still, earnings per share are more important to value creation for shareholders. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Goertek 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 Goertek that you should be aware of.
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