Shareholders might have noticed that GDS Holdings Limited (NASDAQ:GDS) filed its full-year result this time last week. The early response was not positive, with shares down 4.3% to US$51.46 in the past week. It was a pretty bad result overall; while revenues were in line with expectations at CN¥4.1b, statutory losses exploded to CN¥3.60 per share. 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 most recent consensus for GDS Holdings from ten analysts is for revenues of CN¥5.70b in 2020 which, if met, would be a sizeable 38% increase on its sales over the past 12 months. Per-share statutory losses are expected to explode, reaching CN¥0.24 per share. Before this earnings report, the analysts had been forecasting revenues of CN¥5.87b and earnings per share (EPS) of CN¥0.03 in 2020. There looks to have been a significant drop in sentiment regarding GDS Holdings's prospects after these latest results, with a small dip in revenues and the analysts now forecasting a loss instead of a profit.
There was no major change to the consensus price target of CN¥422, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 GDS Holdings, with the most bullish analyst valuing it at CN¥482 and the most bearish at CN¥315 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. Next year brings more of the same, according to the analysts, with revenue forecast to grow 38%, in line with its 41% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 11% per year. So although GDS Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for GDS Holdings dropped from profits to a loss next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at CN¥422, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for GDS Holdings going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for GDS Holdings you should know about.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.