Rainbows and Unicorns: Country Garden Services Holdings Company Limited (HKG:6098) Analysts Just Became A Lot More Optimistic

Country Garden Services Holdings Company Limited (HKG:6098) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 13% to HK$76.65 in the last 7 days. Could this upgrade be enough to drive the stock even higher?

Following the upgrade, the latest consensus from Country Garden Services Holdings' 27 analysts is for revenues of CN¥24b in 2021, which would reflect a sizeable 54% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 51% to CN¥1.47. Previously, the analysts had been modelling revenues of CN¥21b and earnings per share (EPS) of CN¥1.31 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for Country Garden Services Holdings

With these upgrades, we're not surprised to see that the analysts have lifted their price target 15% to CN¥69.97 per share. 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. There are some variant perceptions on Country Garden Services Holdings, with the most bullish analyst valuing it at CN¥108 and the most bearish at CN¥63.19 per share. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Country Garden Services Holdings' growth to accelerate, with the forecast 54% annualised growth to the end of 2021 ranking favourably alongside historical growth of 41% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Country Garden Services Holdings is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Country Garden Services Holdings could be worth investigating further.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Country Garden Services Holdings that suggests the company could be somewhat undervalued. For more information, you can click through to our platform to learn more about our valuation approach.

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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