Results: Spring Airlines Co., Ltd. Beat Earnings Expectations And Analysts Now Have New Forecasts

Spring Airlines Co., Ltd. (SHSE:601021) shareholders are probably feeling a little disappointed, since its shares fell 3.1% to CN¥56.79 in the week after its latest quarterly results. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at CN¥5.2b, statutory earnings beat expectations by a notable 32%, coming in at CN¥0.83 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Spring Airlines

Taking into account the latest results, the consensus forecast from Spring Airlines' 16 analysts is for revenues of CN¥21.9b in 2024. This reflects a solid 14% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 21% to CN¥3.35. Before this earnings report, the analysts had been forecasting revenues of CN¥23.0b and earnings per share (EPS) of CN¥3.61 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

Despite the cuts to forecast earnings, there was no real change to the CN¥71.71 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Spring Airlines analyst has a price target of CN¥81.70 per share, while the most pessimistic values it at CN¥64.80. 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. It's clear from the latest estimates that Spring Airlines' rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 2.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.8% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Spring Airlines is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Spring Airlines. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Spring Airlines going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Spring Airlines you should be aware of.

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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.