Greentown Service Group Co. Ltd. Just Missed Earnings - But Analysts Have Updated Their Models

Shareholders of Greentown Service Group Co. Ltd. (HKG:2869) will be pleased this week, given that the stock price is up 13% to HK$3.62 following its latest interim results. Revenues of CN¥9.1b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at CN¥0.16, missing estimates by 5.9%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 Greentown Service Group

Following the latest results, Greentown Service Group's 21 analysts are now forecasting revenues of CN¥19.4b in 2024. This would be a satisfactory 6.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to step up 10% to CN¥0.24. Before this earnings report, the analysts had been forecasting revenues of CN¥19.6b and earnings per share (EPS) of CN¥0.24 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.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 6.2% to HK$4.10. It looks as though they previously had some doubts over whether the business would live up to their expectations. 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. The most optimistic Greentown Service Group analyst has a price target of HK$6.22 per share, while the most pessimistic values it at HK$3.04. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Greentown Service Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 13% growth on an annualised basis. This is compared to a historical growth rate of 18% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.3% annually. Even after the forecast slowdown in growth, it seems obvious that Greentown Service Group is also expected to grow faster than the wider industry.

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, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Greentown Service Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Greentown Service Group analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Greentown Service Group that you need to take into consideration.

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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.