Taiwan Mobile Co., Ltd. (TPE:3045) last week reported its latest third-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at NT$31b, statutory earnings beat expectations by a notable 13%, coming in at NT$1.00 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from Taiwan Mobile's eleven analysts is for revenues of NT$145.6b in 2021, which would reflect a decent 13% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to drop 13% to NT$3.77 in the same period. In the lead-up to this report, the analysts had been modelling revenues of NT$145.5b and earnings per share (EPS) of NT$3.80 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at NT$101. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Taiwan Mobile, with the most bullish analyst valuing it at NT$116 and the most bearish at NT$85.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. The analysts are definitely expecting Taiwan Mobile's growth to accelerate, with the forecast 13% growth ranking favourably alongside historical growth of 2.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Taiwan Mobile to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 estimates - from multiple Taiwan Mobile analysts - going out to 2022, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 3 warning signs for Taiwan Mobile you should be aware of, and 2 of them are concerning.
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