Perfect World Co., Ltd. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

It's been a good week for Perfect World Co., Ltd. (SZSE:002624) shareholders, because the company has just released its latest half-year results, and the shares gained 4.4% to CN¥7.60. Revenues came in at CN¥2.8b, in line with estimates, while Perfect World reported a statutory loss of CN¥0.07 per share, well short of prior analyst forecasts for a profit. 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 Perfect World after the latest results.

See our latest analysis for Perfect World

After the latest results, the 13 analysts covering Perfect World are now predicting revenues of CN¥6.76b in 2024. If met, this would reflect a notable 11% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Perfect World forecast to report a statutory profit of CN¥0.47 per share. Before this earnings report, the analysts had been forecasting revenues of CN¥8.06b and earnings per share (EPS) of CN¥0.49 in 2024. Indeed, we can see that sentiment has declined measurably after results came out, with a substantial drop in revenue estimates and a minor downgrade to EPS estimates to boot.

The consensus price target fell 6.1% to CN¥9.54, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Perfect World analyst has a price target of CN¥13.50 per share, while the most pessimistic values it at CN¥5.70. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Perfect World's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 23% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 4.7% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 14% per year. So it looks like Perfect World is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Perfect World. They also downgraded Perfect World'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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Perfect World going out to 2026, and you can see them free on our platform here..

Plus, you should also learn about the 1 warning sign we've spotted with Perfect World .

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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.