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The analysts might have been a bit too bullish on Niu Technologies (NASDAQ:NIU), given that the company fell short of expectations when it released its third-quarter results last week. Results showed a clear earnings miss, with CN¥894m revenue coming in 9.1% lower than what the analystsexpected. Statutory earnings per share (EPS) of CN¥0.50 missed the mark badly, arriving some 46% below what was expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Niu Technologies' four analysts are now forecasting revenues of CN¥4.29b in 2021. This would be a major 86% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 94% to CN¥4.42. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥4.42b and earnings per share (EPS) of CN¥4.49 in 2021. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
The consensus price target rose 16% to CN¥247, with the analysts apparently satisfied with the business performance despite lower revenue forecasts. 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 Niu Technologies at CN¥41.92 per share, while the most bearish prices it at CN¥31.15. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Niu Technologies' growth to accelerate, with the forecast 86% growth ranking favourably alongside historical growth of 35% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 27% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Niu Technologies is expected to grow much faster than its 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. They also downgraded their revenue estimates, although industry data suggests that Niu Technologies' revenues are expected to grow faster than the wider industry. With that said, earnings are more important to the long-term value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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. At Simply Wall St, we have a full range of analyst estimates for Niu Technologies going out to 2022, and you can see them free on our platform here..
You still need to take note of risks, for example - Niu Technologies has 1 warning sign we think you should be aware of.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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