Goertek Inc. Just Missed EPS By 37%: Here's What Analysts Think Will Happen Next

It's shaping up to be a tough period for Goertek Inc. (SZSE:002241), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥99b, statutory earnings missed forecasts by an incredible 37%, coming in at just CN¥0.32 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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 Goertek

Taking into account the latest results, the current consensus from Goertek's 16 analysts is for revenues of CN¥103.0b in 2024. This would reflect a reasonable 4.4% increase on its revenue over the past 12 months. Per-share earnings are expected to soar 118% to CN¥0.70. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥112.7b and earnings per share (EPS) of CN¥0.85 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.

The analysts made no major changes to their price target of CN¥17.64, suggesting the downgrades are not expected to have a long-term impact on Goertek's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Goertek analyst has a price target of CN¥27.30 per share, while the most pessimistic values it at CN¥12.00. 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.

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. We would highlight that Goertek's revenue growth is expected to slow, with the forecast 4.4% annualised growth rate until the end of 2024 being well below the historical 29% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 18% annually. Factoring in the forecast slowdown in growth, it seems obvious that Goertek is also expected to grow slower than other industry participants.

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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they 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.

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

It is also worth noting that we have found 3 warning signs for Goertek that you need to take into consideration.

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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.