Gemdale Corporation Just Reported A Surprise Loss: Here's What Analysts Think Will Happen Next

Shareholders of Gemdale Corporation (SHSE:600383) will be pleased this week, given that the stock price is up 17% to CN¥3.98 following its latest quarterly results. Revenues missed expectations, with revenue of CN¥6.9b falling 19% short of forecasts. Earnings correspondingly dipped, with Gemdale reporting a statutory loss of CN¥0.06 per share, where the analysts were expecting a profit. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Gemdale after the latest results.

View our latest analysis for Gemdale

Following the recent earnings report, the consensus from seven analysts covering Gemdale is for revenues of CN¥80.3b in 2024. This implies a considerable 11% decline in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 2,066% to CN¥0.50. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥82.4b and earnings per share (EPS) of CN¥1.16 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the CN¥3.83 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Gemdale analyst has a price target of CN¥5.15 per share, while the most pessimistic values it at CN¥3.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 15% by the end of 2024. This indicates a significant reduction from annual growth of 15% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Gemdale is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Gemdale. 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. 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.

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 Gemdale going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Gemdale has 2 warning signs (and 1 which is a bit concerning) we think 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.