China Distance Education Holdings Limited (NYSE:DL) just released its yearly report and things are looking bullish. China Distance Education Holdings beat earnings, with revenues hitting US$212m, ahead of expectations, and earnings per share outperforming analyst reckonings by a solid 15%. Earnings are an important time for investors, as they can track a company's performance, look at what top 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 analysts' latest post-earnings forecasts for next year.
After the latest results, the only analyst covering China Distance Education Holdings are now predicting revenues of US$258.4m in 2020. If met, this would reflect a substantial 22% improvement in sales compared to the last 12 months. Earnings per share are expected to shoot up 38% to US$0.88. Before this earnings report, analysts had been forecasting revenues of US$230.9m and earnings per share (EPS) of US$0.63 in 2020. There has definitely been an improvement in perception after these results, with analysts noticeably increasing both their earnings and revenue estimates.
It will come as no surprise to learn that analysts have increased their price target for China Distance Education Holdings 15% to US$15.00 on the back of these upgrades.
It can also be useful to step back and take a broader view of how analyst forecasts compare to China Distance Education Holdings's performance in recent years. It's clear from the latest estimates that China Distance Education Holdings's rate of growth is expected to accelerate meaningfully, with forecast 22% revenue growth noticeably faster than its historical growth of 15%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 18% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that China Distance Education Holdings is expected to grow at about the same rate as the wider market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards China Distance Education Holdings following these results. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on China Distance Education Holdings. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
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