Giant Network Group Co., Ltd. Recorded A 13% Miss On Revenue: Analysts Are Revisiting Their Models

It's been a good week for Giant Network Group Co., Ltd. (SZSE:002558) shareholders, because the company has just released its latest quarterly results, and the shares gained 6.5% to CN¥11.79. Revenues were CN¥696m, 13% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of CN¥0.59 being in line with what the analysts forecast. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Giant Network Group

Taking into account the latest results, the consensus forecast from Giant Network Group's four analysts is for revenues of CN¥3.41b in 2024. This reflects a solid 9.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 21% to CN¥0.76. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥3.60b and earnings per share (EPS) of CN¥0.79 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 6.3% to CN¥15.12. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Giant Network Group analyst has a price target of CN¥17.20 per share, while the most pessimistic values it at CN¥13.00. 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. For example, we noticed that Giant Network Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 13% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 2.8% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 17% annually for the foreseeable future. Although Giant Network Group's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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. At Simply Wall St, we have a full range of analyst estimates for Giant Network Group going out to 2026, and you can see them free on our platform here..

Even so, be aware that Giant Network Group is showing 1 warning sign 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.