ZTO Express (Cayman) Inc. (NYSE:ZTO) shareholders are probably feeling a little disappointed, since its shares fell 2.6% to US$32.45 in the week after its latest first-quarter results. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at CN¥3.9b, statutory earnings beat expectations by a notable 65%, coming in at CN¥0.48 per share. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from ZTO Express (Cayman)'s 19 analysts is for revenues of CN¥25.8b in 2020, which would reflect a major 20% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be CN¥6.98, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of CN¥25.7b and earnings per share (EPS) of CN¥7.05 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.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 17% to CN¥242. It looks as though they previously had some doubts over whether the business would live up to their expectations. 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. There are some variant perceptions on ZTO Express (Cayman), with the most bullish analyst valuing it at CN¥42.86 and the most bearish at CN¥19.70 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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. We can infer from the latest estimates that forecasts expect a continuation of ZTO Express (Cayman)'shistorical trends, as next year's 20% revenue growth is roughly in line with 25% annual revenue growth over the past three years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.7% next year. So although ZTO Express (Cayman) is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for ZTO Express (Cayman) going out to 2022, and you can see them free on our platform here..
Plus, you should also learn about the 2 warning signs we've spotted with ZTO Express (Cayman) (including 1 which is concerning) .
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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. Thank you for reading.