Guangzhou Automobile Group Co., Ltd. Just Missed EPS By 22%: Here's What Analysts Think Will Happen Next

Guangzhou Automobile Group Co., Ltd. (HKG:2238) missed earnings with its latest annual results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥130b, statutory earnings missed forecasts by an incredible 22%, coming in at just CN¥0.42 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Guangzhou Automobile Group after the latest results.

View our latest analysis for Guangzhou Automobile Group

Taking into account the latest results, the consensus forecast from Guangzhou Automobile Group's 18 analysts is for revenues of CN¥147.9b in 2024. This reflects a meaningful 14% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 45% to CN¥0.61. Before this earnings report, the analysts had been forecasting revenues of CN¥157.7b and earnings per share (EPS) of CN¥0.65 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 HK$5.38 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. There are some variant perceptions on Guangzhou Automobile Group, with the most bullish analyst valuing it at HK$9.85 and the most bearish at HK$3.15 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Guangzhou Automobile Group's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Guangzhou Automobile Group'shistorical trends, as the 14% annualised revenue growth to the end of 2024 is roughly in line with the 17% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 13% annually. It's clear that while Guangzhou Automobile Group's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

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. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Guangzhou Automobile Group 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 Guangzhou Automobile Group 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.