Onewo Inc. Just Missed Earnings - But Analysts Have Updated Their Models

Onewo Inc. (HKG:2602) missed earnings with its latest yearly results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥30b, statutory earnings missed forecasts by 18%, coming in at just CN¥1.40 per share. 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.

View our latest analysis for Onewo

Following the latest results, Onewo's eleven analysts are now forecasting revenues of CN¥37.7b in 2023. This would be a huge 25% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 45% to CN¥1.86. In the lead-up to this report, the analysts had been modelling revenues of CN¥39.5b and earnings per share (EPS) of CN¥2.24 in 2023. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 9.7% to HK$56.00. 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. Currently, the most bullish analyst values Onewo at HK$69.97 per share, while the most bearish prices it at HK$39.40. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 25% growth on an annualised basis. That is in line with its 24% annual growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 9.1% per year. So although Onewo is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although industry data suggests that Onewo's revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Onewo. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Onewo analysts - going out to 2025, and you can see them free on our platform here.

We also provide an overview of the Onewo Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.