Formosa Plastics Corporation Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Formosa Plastics Corporation (TWSE:1301) came out with its first-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like a pretty bad result, all things considered. Although revenues of NT$48b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 63% to hit NT$0.03 per share. 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.

Check out our latest analysis for Formosa Plastics

Following last week's earnings report, Formosa Plastics' seven analysts are forecasting 2024 revenues to be NT$196.6b, approximately in line with the last 12 months. Statutory earnings per share are predicted to shoot up 142% to NT$1.98. In the lead-up to this report, the analysts had been modelling revenues of NT$206.8b and earnings per share (EPS) of NT$2.05 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

The analysts made no major changes to their price target of NT$71.89, suggesting the downgrades are not expected to have a long-term impact on Formosa Plastics' valuation. 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. There are some variant perceptions on Formosa Plastics, with the most bullish analyst valuing it at NT$86.00 and the most bearish at NT$58.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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 Formosa Plastics' revenue growth is expected to slow, with the forecast 1.1% annualised growth rate until the end of 2024 being well below the historical 1.8% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.0% per year. Factoring in the forecast slowdown in growth, it seems obvious that Formosa Plastics is also expected to grow slower than other industry participants.

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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target held steady at NT$71.89, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Formosa Plastics. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Formosa Plastics analysts - going out to 2026, 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 Formosa Plastics 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.