It's been a pretty great week for Country Garden Holdings Company Limited (HKG:2007) shareholders, with its shares surging 12% to HK$9.38 in the week since its latest annual results. It was an okay report, and revenues came in at CN¥486b, approximately in line with analyst estimates leading up to the results announcement. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Country Garden Holdings' 20 analysts is for revenues of CN¥568.6b in 2020, which would reflect a meaningful 17% increase on its sales over the past 12 months. Per-share earnings are expected to grow 13% to CN¥2.08. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥577.2b and earnings per share (EPS) of CN¥2.12 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at CN¥11.77. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Country Garden Holdings at CN¥16.57 per share, while the most bearish prices it at CN¥8.21. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Country Garden Holdings' revenue growth is expected to slow, with forecast 17% increase next year well below the historical 37%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 15% next year. Factoring in the forecast slowdown in growth, it looks like Country Garden Holdings is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 Country Garden Holdings analysts - going out to 2022, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Country Garden Holdings (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.
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