Gamania Digital Entertainment Co., Ltd. (GTSM:6180) Analysts Are Reducing Their Forecasts For Next Year

The latest analyst coverage could presage a bad day for Gamania Digital Entertainment Co., Ltd. (GTSM:6180), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from Gamania Digital Entertainment's two analysts is for revenues of NT$11b in 2021, which would reflect a reasonable 2.9% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 2.6% to NT$5.95. Prior to this update, the analysts had been forecasting revenues of NT$13b and earnings per share (EPS) of NT$7.84 in 2021. Indeed, we can see that the analysts are a lot more bearish about Gamania Digital Entertainment's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Gamania Digital Entertainment

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 Gamania Digital Entertainment's revenue growth is expected to slow, with forecast 2.9% increase next year well below the historical 4.9% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Gamania Digital Entertainment.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Gamania Digital Entertainment's revenues are expected to grow slower than the wider market. Given the serious cut to next year's outlook, it's clear that analysts have turned more bearish on Gamania Digital Entertainment, and we wouldn't blame shareholders for feeling a little more cautious themselves.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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