As you might know, Hollysys Automation Technologies Ltd. (NASDAQ:HOLI) recently reported its quarterly numbers. Results overall were respectable, with statutory earnings of US$2.05 per share roughly in line with what analysts had forecast. Revenues of US$170m came in 8.4% ahead of analyst predictions. Following the result, 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the latest consensus from Hollysys Automation Technologies's five analysts is for revenues of US$613.5m in 2020, which would reflect a credible 6.6% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to ascend 15% to US$2.22. Yet prior to the latest earnings, analysts had been forecasting revenues of US$633.6m and earnings per share (EPS) of US$2.26 in 2020. So it looks like analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is expected to maintain EPS.
The average price target was steady at US$23.03 even though revenue estimates declined; likely suggesting analysts place a higher value on earnings. 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. There are some variant perceptions on Hollysys Automation Technologies, with the most bullish analyst valuing it at US$28.00 and the most bearish at US$18.20 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Further, we can compare these estimates to past performance, and see how Hollysys Automation Technologies forecasts compare to the wider market's forecast performance. Analysts are definitely expecting Hollysys Automation Technologies's growth to accelerate, with the forecast 6.6% growth ranking favourably alongside historical growth of 1.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Hollysys Automation Technologies is expected to grow much faster than its market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$23.03, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Hollysys Automation Technologies analysts - going out to 2024, and you can see them free on our platform here.
We also provide an overview of the Hollysys Automation Technologies Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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