Cathay Financial Holding Co., Ltd. Beat Revenue Forecasts By 95%: Here's What Analysts Are Forecasting Next

As you might know, Cathay Financial Holding Co., Ltd. (TPE:2882) recently reported its annual numbers. Revenue of NT$1.2t beat expectations by an impressive 95%, while statutory earnings per share (EPS) were NT$5.41, in line with estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Cathay Financial Holding after the latest results.

See our latest analysis for Cathay Financial Holding

After the latest results, the consensus from Cathay Financial Holding's twelve analysts is for revenues of NT$553.7b in 2021, which would reflect a stressful 52% decline in sales compared to the last year of performance. Statutory earnings per share are predicted to increase 2.3% to NT$5.60. Before this earnings report, the analysts had been forecasting revenues of NT$562.5b and earnings per share (EPS) of NT$5.16 in 2021. So the consensus seems to have become somewhat more optimistic on Cathay Financial Holding's earnings potential following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 7.8% to NT$50.07. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Cathay Financial Holding, with the most bullish analyst valuing it at NT$55.00 and the most bearish at NT$41.30 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Cathay Financial Holding is an easy business to forecast or the the analysts are all using similar assumptions.

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. We would highlight that sales are expected to reverse, with a forecast 52% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 13% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.9% per year. It's pretty clear that Cathay Financial Holding's revenues are expected to perform substantially worse 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 Cathay Financial Holding following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Cathay Financial Holding's revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 estimates - from multiple Cathay Financial Holding analysts - going out to 2022, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Cathay Financial Holding that you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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