BetterLife Holding Limited Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a good week for BetterLife Holding Limited (HKG:6909) shareholders, because the company has just released its latest full-year results, and the shares gained 2.1% to HK$4.91. Revenues of CN¥10.0b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of CN¥0.86 an impressive 30% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for BetterLife Holding

Taking into account the latest results, the current consensus from BetterLife Holding's dual analysts is for revenues of CN¥12.6b in 2022, which would reflect a huge 26% increase on its sales over the past 12 months. Per-share earnings are expected to leap 33% to CN¥0.98. Before this earnings report, the analysts had been forecasting revenues of CN¥13.5b and earnings per share (EPS) of CN¥0.82 in 2022. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the substantial gain in to the earnings per share numbers.

The consensus price target fell 9.5% to HK$10.49, with the analysts signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts.

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. One thing stands out from these estimates, which is that BetterLife Holding is forecast to grow faster in the future than it has in the past, with revenues expected to display 26% annualised growth until the end of 2022. If achieved, this would be a much better result than the 12% annual decline over the past three years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 16% annually. Not only are BetterLife Holding's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider 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 BetterLife Holding following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. With that said, earnings are more important to the long-term value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of BetterLife Holding's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for BetterLife Holding going out as far as 2024, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with BetterLife Holding , and understanding this should be part of your investment process.

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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.