Formosa Chemicals & Fibre Corporation Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Formosa Chemicals & Fibre Corporation (TWSE:1326) 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. Revenues were NT$84b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at NT$0.27, an impressive 59% 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Formosa Chemicals & Fibre

Following the latest results, Formosa Chemicals & Fibre's eight analysts are now forecasting revenues of NT$347.3b in 2024. This would be a satisfactory 4.1% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be NT$1.85, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of NT$351.0b and earnings per share (EPS) of NT$1.77 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of NT$58.15, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Formosa Chemicals & Fibre at NT$67.00 per share, while the most bearish prices it at NT$49.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Formosa Chemicals & Fibre shareholders.

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 Formosa Chemicals & Fibre's growth to accelerate, with the forecast 5.5% annualised growth to the end of 2024 ranking favourably alongside historical growth of 2.2% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 5.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Formosa Chemicals & Fibre is expected to grow at about the same rate as 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 Formosa Chemicals & Fibre following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 Formosa Chemicals & Fibre analysts - going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Formosa Chemicals & Fibre .

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.