It's been a good week for Giant Network Group Co., Ltd. (SZSE:002558) shareholders, because the company has just released its latest first-quarter results, and the shares gained 6.5% to CN¥11.79. Revenues were CN¥696m, 13% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of CN¥0.59 being in line with what the analysts anticipated. 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 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 current consensus from Giant Network Group's four analysts is for revenues of CN¥3.41b in 2024. This would reflect a decent 9.4% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 21% to CN¥0.76. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥3.60b and earnings per share (EPS) of CN¥0.79 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 6.3% to CN¥15.12, with the weaker earnings outlook clearly leading valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Giant Network Group at CN¥17.20 per share, while the most bearish prices it at CN¥13.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. One thing stands out from these estimates, which is that Giant Network Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 13% annualised growth until the end of 2024. If achieved, this would be a much better result than the 2.8% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 17% annually for the foreseeable future. So although Giant Network Group's revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Giant Network Group. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Giant Network Group. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Giant Network Group going out to 2026, and you can see them free on our platform here..
Plus, you should also learn about the 1 warning sign we've spotted with Giant Network Group .
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.