Earnings Beat: King Yuan Electronics Co., Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a good week for King Yuan Electronics Co., Ltd. (TWSE:2449) shareholders, because the company has just released its latest quarterly results, and the shares gained 7.5% to NT$122. Revenues missed the mark, coming in 12% below forecasts, at NT$6.5b. Statutory profits were better overall though, with per-share profits of NT$1.55 being a notable 11% above what the analysts were modelling. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for King Yuan Electronics

Following the recent earnings report, the consensus from ten analysts covering King Yuan Electronics is for revenues of NT$29.1b in 2024. This implies a not inconsiderable 15% decline in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 55% to NT$7.59. Before this earnings report, the analysts had been forecasting revenues of NT$33.0b and earnings per share (EPS) of NT$7.70 in 2024. So there's been a clear change in sentiment after these results, with the analysts making a real cut to revenues and reconfirming their earnings per share estimates.

The consensus price target rose 11% to NT$122, with the analysts apparently satisfied with the business performance despite lower revenue forecasts. 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 King Yuan Electronics, with the most bullish analyst valuing it at NT$143 and the most bearish at NT$105 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 27% by the end of 2024. This indicates a significant reduction from annual growth of 7.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 16% annually for the foreseeable future. It's pretty clear that King Yuan Electronics' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings per share are more important to value creation for shareholders. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 King Yuan Electronics going out to 2026, and you can see them free on our platform here.

Even so, be aware that King Yuan Electronics is showing 1 warning sign in our investment analysis , you should know about...

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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.