Shareholders might have noticed that Yue Yuen Industrial (Holdings) Limited (HKG:551) filed its quarterly result this time last week. The early response was not positive, with shares down 3.8% to HK$12.54 in the past week. It was an okay result overall, with revenues coming in at US$2.0b, roughly what the analysts had been expecting. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Yue Yuen Industrial (Holdings) after the latest results.
Taking into account the latest results, the current consensus, from the ten analysts covering Yue Yuen Industrial (Holdings), is for revenues of US$9.11b in 2020, which would reflect a discernible 5.1% reduction in Yue Yuen Industrial (Holdings)'s sales over the past 12 months. Statutory earnings per share are forecast to plunge 96% to US$0.0043 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$9.56b and earnings per share (EPS) of US$0.12 in 2020. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.
The analysts made no major changes to their price target of US$2.01, suggesting the downgrades are not expected to have a long-term impact on Yue Yuen Industrial (Holdings)'svaluation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Yue Yuen Industrial (Holdings) at US$3.45 per share, while the most bearish prices it at US$1.33. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Yue Yuen Industrial (Holdings)'s past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 5.1% revenue decline a notable change from historical growth of 4.5% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 12% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Yue Yuen Industrial (Holdings) is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$2.01, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Yue Yuen Industrial (Holdings) analysts - going out to 2022, and you can see them free on our platform here.
It is also worth noting that we have found 4 warning signs for Yue Yuen Industrial (Holdings) (1 can't be ignored!) that you need to take into consideration.
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.