Party Time: Brokers Just Made Major Increases To Their TPK Holding Co., Ltd. (TPE:3673) Earnings Forecasts

Celebrations may be in order for TPK Holding Co., Ltd. (TPE:3673) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The market seems to be pricing in some improvement in the business too, with the stock up 8.9% over the past week, closing at NT$49.10. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the latest upgrade, TPK Holding's four analysts currently expect revenues in 2021 to be NT$114b, approximately in line with the last 12 months. Statutory earnings per share are forecast to be NT$2.50, approximately in line with the last 12 months. Previously, the analysts had been modelling revenues of NT$102b and earnings per share (EPS) of NT$2.00 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for TPK Holding

Despite these upgrades, the analysts have not made any major changes to their price target of NT$49.63, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. There are some variant perceptions on TPK Holding, with the most bullish analyst valuing it at NT$64.00 and the most bearish at NT$39.00 per share. 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 TPK Holding shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 0.5% by the end of 2021. This indicates a significant reduction from annual growth of 5.9% 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 8.9% annually for the foreseeable future. It's pretty clear that TPK Holding's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at TPK Holding.

Analysts are definitely bullish on TPK Holding, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including a weak balance sheet. For more information, you can click through to our platform to learn more about this and the 1 other risk we've identified .

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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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