It's shaping up to be a tough period for Vitasoy International Holdings Limited (HKG:345), which a week ago released some disappointing half-yearly results that could have a notable impact on how the market views the stock. Results look to have been somewhat negative - revenue fell 3.8% short of analyst estimates at HK$4.7b, and earnings of HK$0.50 per share missed forecasts by 5.9%. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest forecasts to see whether analysts have changed their mind on Vitasoy International Holdings after the latest results.
Taking into account the latest results, the latest consensus from Vitasoy International Holdings's nine analysts is for revenues of HK$7.98b in 2020, which would reflect a credible 2.7% improvement in sales compared to the last 12 months. Earnings per share are expected to rise 4.1% to HK$0.70. Yet prior to the latest earnings, analysts had been forecasting revenues of HK$8.47b and earnings per share (EPS) of HK$0.74 in 2020. Analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
It'll come as no surprise then, to learn that analysts have cut their price target 6.8% to HK$37.24. 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 Vitasoy International Holdings, with the most bullish analyst valuing it at HK$50.00 and the most bearish at HK$28.45 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Vitasoy International Holdings's past performance and to peers in the same market. We would highlight that Vitasoy International Holdings's revenue growth is expected to slow, with forecast 2.7% increase next year well below the historical 9.7%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 8.9% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Vitasoy International Holdings.
The Bottom Line
The biggest highlight of the new consensus is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Vitasoy International Holdings. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Vitasoy International Holdings's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Vitasoy International Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for Vitasoy International Holdings going out to 2022, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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