It's been a pretty great week for Foxconn Industrial Internet Co., Ltd. (SHSE:601138) shareholders, with its shares surging 10% to CN¥24.50 in the week since its latest first-quarter results. Statutory earnings per share of CN¥0.21 unfortunately missed expectations by 19%, although it was encouraging to see revenues of CN¥119b exceed expectations by 3.0%. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Foxconn Industrial Internet's 20 analysts are now forecasting revenues of CN¥560.5b in 2024. This would be a notable 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 26% to CN¥1.40. In the lead-up to this report, the analysts had been modelling revenues of CN¥555.1b and earnings per share (EPS) of CN¥1.34 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at CN¥29.91, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Foxconn Industrial Internet at CN¥36.00 per share, while the most bearish prices it at CN¥20.60. 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 Foxconn Industrial Internet shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Foxconn Industrial Internet's growth to accelerate, with the forecast 20% annualised growth to the end of 2024 ranking favourably alongside historical growth of 4.4% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 18% per year. Foxconn Industrial Internet is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
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 Foxconn Industrial Internet following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall 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 Foxconn Industrial Internet. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Foxconn Industrial Internet analysts - going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for Foxconn Industrial Internet that we have uncovered.
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