A week ago, Xiaomi Corporation (HKG:1810) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 3.8% to hit CN¥50b. Xiaomi also reported a statutory profit of CN¥0.089, which was an impressive 43% above what the analysts had forecast. The 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the 30 analysts covering Xiaomi are now predicting revenues of CN¥240.2b in 2020. If met, this would reflect a meaningful 13% improvement in sales compared to the last 12 months. Per-share earnings are expected to increase 6.4% to CN¥0.41. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥240.3b and earnings per share (EPS) of CN¥0.40 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.
The consensus price target rose 13% to CN¥12.10 despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Xiaomi's earnings by assigning a price premium. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Xiaomi, with the most bullish analyst valuing it at CN¥16.26 and the most bearish at CN¥6.82 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Xiaomi's past performance and to peers in the same industry. Next year brings more of the same, according to the analysts, with revenue forecast to grow 13%, in line with its 15% annual growth over the past year. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 15% next year. So although Xiaomi is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider 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. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Xiaomi going out to 2023, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for Xiaomi that you need to take into consideration.
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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.