New Forecasts: Here's What Analysts Think The Future Holds For Guangzhou Automobile Group Co., Ltd. (HKG:2238)

Celebrations may be in order for Guangzhou Automobile Group Co., Ltd. (HKG:2238) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Guangzhou Automobile Group will make substantially more sales than they'd previously expected.

After this upgrade, Guangzhou Automobile Group's 20 analysts are now forecasting revenues of CN¥98b in 2022. This would be a solid 9.6% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to expand 15% to CN¥0.96. Previously, the analysts had been modelling revenues of CN¥89b and earnings per share (EPS) of CN¥0.90 in 2022. The forecasts seem more optimistic now, with a nice gain to revenue and a small lift in earnings per share estimates.

Check out our latest analysis for Guangzhou Automobile Group

Despite these upgrades, the analysts have not made any major changes to their price target of CN¥8.61, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Guangzhou Automobile Group analyst has a price target of CN¥12.71 per share, while the most pessimistic values it at CN¥5.71. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the 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. It's clear from the latest estimates that Guangzhou Automobile Group's rate of growth is expected to accelerate meaningfully, with the forecast 20% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 2.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 22% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Guangzhou Automobile Group is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Guangzhou Automobile Group.

Analysts are definitely bullish on Guangzhou Automobile Group, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including concerns around earnings quality. For more information, you can click through to our platform to learn more about this and the 1 other risk we've identified .

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.