Revenue Beat: Guangdong Investment Limited Beat Analyst Estimates By 11%

It's been a pretty great week for Guangdong Investment Limited (HKG:270) shareholders, with its shares surging 11% to HK$14.94 in the week since its latest yearly results. It was a mildly positive result, with revenues exceeding expectations at HK$17b, while statutory earnings per share (EPS) of HK$0.77 were in line with analyst forecasts. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Guangdong Investment after the latest results.

Check out our latest analysis for Guangdong Investment

Taking into account the latest results, the most recent consensus for Guangdong Investment from eleven analysts is for revenues of HK$17.8b in 2020 which, if met, would be a credible 6.3% increase on its sales over the past 12 months. Statutory earnings per share are predicted to rise 6.3% to HK$0.82. Before this earnings report, the analysts had been forecasting revenues of HK$17.8b and earnings per share (EPS) of HK$0.86 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at HK$17.28, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. Currently, the most bullish analyst values Guangdong Investment at HK$20.00 per share, while the most bearish prices it at HK$13.50. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Guangdong Investment's revenue growth will slow down substantially, with revenues next year expected to grow 6.3%, compared to a historical growth rate of 13% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that Guangdong Investment is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Guangdong Investment. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 Guangdong Investment going out to 2022, and you can see them free on our platform here..

You can also see our analysis of Guangdong Investment's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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