Earnings Beat: Pegatron Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a good week for Pegatron Corporation (TWSE:4938) shareholders, because the company has just released its latest second-quarter results, and the shares gained 4.5% to NT$104. Revenues of NT$254b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of NT$2.10 an impressive 35% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Pegatron

Following last week's earnings report, Pegatron's eleven analysts are forecasting 2024 revenues to be NT$1.15t, approximately in line with the last 12 months. Statutory per share are forecast to be NT$7.03, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of NT$1.23t and earnings per share (EPS) of NT$6.60 in 2024. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

The consensus has made no major changes to the price target of NT$105, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. 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. The most optimistic Pegatron analyst has a price target of NT$125 per share, while the most pessimistic values it at NT$84.70. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. One thing that stands out from these estimates is that revenues are expected to keep falling until the end of 2024, roughly in line with the historical decline of 2.4% per annum over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 20% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Pegatron to suffer worse than 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 Pegatron following these results. 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. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at NT$105, with the latest estimates not enough to have an impact on their price targets.

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. At Simply Wall St, we have a full range of analyst estimates for Pegatron going out to 2026, and you can see them free on our platform here..

Even so, be aware that Pegatron 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.