BAIC Motor Corporation Limited Just Recorded A 9.2% Earnings Beat: Here's What Analysts Think
It's been a sad week for BAIC Motor Corporation Limited (HKG:1958), who've watched their investment drop 13% to HK$3.27 in the week since the company reported its third-quarter result. It was a pretty mixed result, with revenues beating expectations to hit CN¥88b. Statutory earnings fell 3.6% short of analyst forecasts, reaching CN¥0.55 per share. 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.
Check out our latest analysis for BAIC Motor
Taking into account the latest results, the latest consensus from BAIC Motor's 18 analysts is for revenues of CN¥183.5b in 2020, which would reflect a notable 8.1% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to bounce 37% to CN¥0.60. Before this earnings report, analysts had been forecasting revenues of CN¥183.9b and earnings per share (EPS) of CN¥0.61 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
Analysts reconfirmed their price target of CN¥4.48, showing that the business is executing well and in line with expectations. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on BAIC Motor, with the most bullish analyst valuing it at CN¥8.17 and the most bearish at CN¥3.12 per share. With such a wide range in price targets, analysts are almost certainly baking in outcomes as diverse as total success and probable failure in the underlying business. With this in mind, we wouldn't assign too much meaning to the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that BAIC Motor's revenue growth is expected to slow, with forecast 8.1% increase next year well below the historical 21%p.a. growth over the last five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 7.6% per year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting BAIC Motor to grow at about the same rate as the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. The consensus price target held steady at CN¥4.48, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on BAIC Motor. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple BAIC Motor analysts - going out to 2022, and you can see them free on our platform here.
We also provide an overview of the BAIC Motor Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
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