Earnings Miss: Gotion High-tech Co.,Ltd. Missed EPS By 68% And Analysts Are Revising Their Forecasts

Last week, you might have seen that Gotion High-tech Co.,Ltd. (SZSE:002074) released its quarterly result to the market. The early response was not positive, with shares down 2.2% to CN¥17.76 in the past week. Revenues of CN¥7.5b smashed analyst forecasts, although statutory earnings came up 68% short, at CN¥0.04 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the 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 statutory forecasts to see whether the analysts have changed their mind on Gotion High-techLtd after the latest results.

See our latest analysis for Gotion High-techLtd

Taking into account the latest results, the current consensus from Gotion High-techLtd's 14 analysts is for revenues of CN¥38.9b in 2024. This would reflect a sizeable 22% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to bounce 22% to CN¥0.64. In the lead-up to this report, the analysts had been modelling revenues of CN¥42.1b and earnings per share (EPS) of CN¥0.69 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The consensus price target fell 7.0% to CN¥22.67, with the weaker earnings outlook clearly leading valuation estimates. 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. There are some variant perceptions on Gotion High-techLtd, with the most bullish analyst valuing it at CN¥31.85 and the most bearish at CN¥10.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Gotion High-techLtd's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Gotion High-techLtd's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 30% growth on an annualised basis. This is compared to a historical growth rate of 44% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 18% per year. Even after the forecast slowdown in growth, it seems obvious that Gotion High-techLtd is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded Gotion High-techLtd's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Gotion High-techLtd going out to 2026, and you can see them free on our platform here.

Even so, be aware that Gotion High-techLtd is showing 2 warning signs in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.