Want Want China Holdings Limited (HKG:151) Just Reported Interim Earnings And Analysts Are Lifting Their Estimates

Shareholders of Want Want China Holdings Limited (HKG:151) will be pleased this week, given that the stock price is up 15% to HK$5.98 following its latest half-yearly results. Results were roughly in line with estimates, with revenues of CN¥11b and statutory earnings per share of CN¥0.29. 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 Want Want China Holdings after the latest results.

Check out our latest analysis for Want Want China Holdings

After the latest results, the 17 analysts covering Want Want China Holdings are now predicting revenues of CN¥22.1b in 2021. If met, this would reflect a credible 4.9% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 6.2% to CN¥0.34. In the lead-up to this report, the analysts had been modelling revenues of CN¥20.3b and earnings per share (EPS) of CN¥0.31 in 2021. So it seems there's been a definite increase in optimism about Want Want China Holdings' future following the latest results, with a solid gain to the earnings per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of US$0.88, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Want Want China Holdings, with the most bullish analyst valuing it at US$8.69 and the most bearish at US$5.20 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Want Want China Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 4.9%, well above its historical decline of 0.02% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 12% per year. Although Want Want China Holdings' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Want Want China Holdings' earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at CN¥0.88, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Want Want China Holdings analysts - going out to 2023, and you can see them free on our platform here.

Even so, be aware that Want Want China Holdings is showing 2 warning signs in our investment analysis , you should know about...

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