OneSmart International Education Group Limited (NYSE:ONE) shares fell 2.6% to US$6.83 in the week since its latest yearly results. It looks like a pretty bad result, all things considered. Although revenues of CN¥4.0b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 25% to hit CN¥1.46 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
After the latest results, the three analysts covering OneSmart International Education Group are now predicting revenues of CN¥5.06b in 2020. If met, this would reflect a major 27% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to step up 17% to CN¥1.77. Before this earnings report, analysts had been forecasting revenues of CN¥5.37b and earnings per share (EPS) of CN¥2.70 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.
It'll come as no surprise then, to learn that analysts have cut their price target 11% to CN¥62.48. 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. The most optimistic OneSmart International Education Group analyst has a price target of CN¥64.67 per share, while the most pessimistic values it at CN¥59.07. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Further, we can compare these estimates to past performance, and see how OneSmart International Education Group forecasts compare to the wider market's forecast performance. Next year brings more of the same, according to analysts, with revenue forecast to grow 27%, in line with its 32% annual growth over the past three years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 20% next year. So it's pretty clear that OneSmart International Education Group is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for OneSmart International Education Group going out to 2022, and you can see them free on our platform here.
We also provide an overview of the OneSmart International Education Group Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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