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21Vianet Group, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

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Simply Wall St
·4 min read
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Shareholders will be ecstatic, with their stake up 32% over the past week following 21Vianet Group, Inc.'s (NASDAQ:VNET) latest quarterly results. It looks like a credible result overall - although revenues of US$1.2b were what the analysts expected, 21Vianet Group surprised by delivering a statutory profit of US$0.48 per share, instead of the previously forecast loss. 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.

View our latest analysis for 21Vianet Group

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the ten analysts covering 21Vianet Group provided consensus estimates of US$938.4m revenue in 2021, which would reflect a substantial 78% decline on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 100% to US$0.028. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$6.18b and losses of US$0.17 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also reducing the estimated losses the business will incur.

The consensus price target rose 7.5% to CN¥244, with the analysts increasingly optimistic about shrinking losses, despite the expected decline in sales. 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. The most optimistic 21Vianet Group analyst has a price target of CN¥42.45 per share, while the most pessimistic values it at CN¥29.50. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting 21Vianet Group is an easy business to forecast or the the analysts are all using similar assumptions.

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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 78%, a significant reduction from annual growth of 1.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 14% annually for the foreseeable future. It's pretty clear that 21Vianet Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, long term profitability is more important for the value creation process. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for 21Vianet Group going out to 2024, and you can see them free on our platform here.

You still need to take note of risks, for example - 21Vianet Group has 2 warning signs we think you should be aware of.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.