NT$134: That's What Analysts Think Sunonwealth Electric Machine Industry Co., Ltd. (TWSE:2421) Is Worth After Its Latest Results

Shareholders might have noticed that Sunonwealth Electric Machine Industry Co., Ltd. (TWSE:2421) filed its quarterly result this time last week. The early response was not positive, with shares down 4.9% to NT$92.20 in the past week. It was a pretty mixed result, with revenues beating expectations to hit NT$3.7b. Statutory earnings fell 3.2% short of analyst forecasts, reaching NT$1.39 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Sunonwealth Electric Machine Industry

Taking into account the latest results, the current consensus from Sunonwealth Electric Machine Industry's four analysts is for revenues of NT$15.2b in 2024. This would reflect a solid 14% increase on its revenue over the past 12 months. Per-share earnings are expected to jump 27% to NT$6.18. In the lead-up to this report, the analysts had been modelling revenues of NT$14.9b and earnings per share (EPS) of NT$6.60 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target fell 13% to NT$134, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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 Sunonwealth Electric Machine Industry at NT$143 per share, while the most bearish prices it at NT$120. This is a very narrow spread of estimates, implying either that Sunonwealth Electric Machine Industry is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Sunonwealth Electric Machine Industry's growth to accelerate, with the forecast 30% annualised growth to the end of 2024 ranking favourably alongside historical growth of 3.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sunonwealth Electric Machine Industry to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sunonwealth Electric Machine Industry. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Sunonwealth Electric Machine Industry's future valuation.

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 forecasts for Sunonwealth Electric Machine Industry going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Sunonwealth Electric Machine Industry that you should be aware of.

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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.