Yue Yuen Industrial (Holdings) Limited Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

The investors in Yue Yuen Industrial (Holdings) Limited's (HKG:551) will be rubbing their hands together with glee today, after the share price leapt 25% to HK$14.34 in the week following its annual results. Revenues were US$7.9b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.17, an impressive 47% ahead of estimates. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Yue Yuen Industrial (Holdings)

Taking into account the latest results, the most recent consensus for Yue Yuen Industrial (Holdings) from twelve analysts is for revenues of US$8.28b in 2024. If met, it would imply a modest 4.9% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to swell 13% to US$0.19. In the lead-up to this report, the analysts had been modelling revenues of US$8.32b and earnings per share (EPS) of US$0.18 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 7.0% to HK$13.06, suggesting that higher earnings estimates flow through to the stock's valuation as well. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Yue Yuen Industrial (Holdings) at HK$18.01 per share, while the most bearish prices it at HK$8.52. 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. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on 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. For example, we noticed that Yue Yuen Industrial (Holdings)'s rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 4.9% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 4.1% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.8% annually for the foreseeable future. So although Yue Yuen Industrial (Holdings)'s revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Yue Yuen Industrial (Holdings) following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Yue Yuen Industrial (Holdings)'s revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Yue Yuen Industrial (Holdings) analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Yue Yuen Industrial (Holdings) that you need to take into consideration.

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.