Chindata Group Holdings Limited Surprised Analysts With A Profit, And Analysts Boosted Their EPS Forecasts

Investors in Chindata Group Holdings Limited (NASDAQ:CD) had a good week, as its shares rose 3.7% to close at US$9.72 following the release of its third-quarter results. It was overall a positive result, with revenues beating expectations by 2.5% to hit CN¥741m. Chindata Group Holdings also reported a statutory profit of CN¥0.11, which was a nice improvement from the loss that the analysts were predicting. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Chindata Group Holdings

After the latest results, the nine analysts covering Chindata Group Holdings are now predicting revenues of CN¥4.09b in 2022. If met, this would reflect a major 56% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 57% to CN¥0.76. In the lead-up to this report, the analysts had been modelling revenues of CN¥4.10b and earnings per share (EPS) of CN¥0.62 in 2022. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the great increase in earnings per share expectations following these results.

There's been no major changes to the consensus price target of US$19.95, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. The most optimistic Chindata Group Holdings analyst has a price target of US$25.39 per share, while the most pessimistic values it at US$15.78. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. It's pretty clear that there is an expectation that Chindata Group Holdings' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 43% growth on an annualised basis. This is compared to a historical growth rate of 59% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 15% per year. Even after the forecast slowdown in growth, it seems obvious that Chindata Group Holdings is also expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Chindata Group Holdings' earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Chindata Group Holdings going out to 2023, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for Chindata Group Holdings (1 makes us a bit uncomfortable!) that we have uncovered.

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 (at) simplywallst.com.