Li Ning Company Limited Just Missed EPS By 7.3%: Here's What Analysts Think Will Happen Next

It's been a pretty great week for Li Ning Company Limited (HKG:2331) shareholders, with its shares surging 15% to HK$19.90 in the week since its latest yearly results. Revenues of CN¥28b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at CN¥1.23, missing estimates by 7.3%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Li Ning after the latest results.

See our latest analysis for Li Ning

Taking into account the latest results, the consensus forecast from Li Ning's 37 analysts is for revenues of CN¥29.3b in 2024. This reflects a reasonable 6.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 5.8% to CN¥1.33. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥29.3b and earnings per share (EPS) of CN¥1.34 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of HK$26.40, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Li Ning, with the most bullish analyst valuing it at HK$51.95 and the most bearish at HK$13.99 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. 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 Li Ning's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Li Ning's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.1% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.8% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Li Ning.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Li Ning's revenue is expected to perform worse than the wider industry. The consensus price target held steady at HK$26.40, with the latest estimates not enough to have an impact on their price targets.

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

You can also see our analysis of Li Ning's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.