Advantech Co., Ltd. Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

Advantech Co., Ltd. (TWSE:2395) last week reported its latest second-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. The result was positive overall - although revenues of NT$15b were in line with what the analysts predicted, Advantech surprised by delivering a statutory profit of NT$2.43 per share, modestly greater than expected. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Advantech

Following the latest results, Advantech's 14 analysts are now forecasting revenues of NT$62.5b in 2024. This would be an okay 6.6% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be NT$10.22, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of NT$66.4b and earnings per share (EPS) of NT$11.87 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.4% to NT$354. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Advantech, with the most bullish analyst valuing it at NT$457 and the most bearish at NT$275 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 Advantech 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. It's clear from the latest estimates that Advantech's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 5.8% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 20% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Advantech is expected to grow slower than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Advantech. 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. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Advantech. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Advantech going out to 2026, and you can see them free on our platform here..

It is also worth noting that we have found 1 warning sign for Advantech that you need to take into consideration.

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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.

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