Shareholders in Qudian Inc. (NYSE:QD) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Qudian has also found favour with investors, with the stock up a worthy 17% to US$2.46 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
After the upgrade, the consensus from Qudian's three analysts is for revenues of CN¥2.7b in 2021, which would reflect a not inconsiderable 14% decline in sales compared to the last year of performance. Per-share earnings are expected to soar 56% to CN¥5.91. Before this latest update, the analysts had been forecasting revenues of CN¥2.3b and earnings per share (EPS) of CN¥4.43 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
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 more thing stood out to us about these estimates, and it's the idea that Qudian's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 18% to the end of 2021. This tops off a historical decline of 15% a year over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 10% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Qudian to suffer worse than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. With a serious upgrade to expectations, it might be time to take another look at Qudian.
Still, 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 Qudian going out to 2022, and you can see them free on our platform here..
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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