Shareholders will be ecstatic, with their stake up 32% over the past week following 21Vianet Group, Inc.'s (NASDAQ:VNET) latest quarterly results. Although revenues of US$1.2b were in line with analyst expectations, 21Vianet Group surprised on the earnings front, with an unexpected (statutory) profit of US$0.48 per share a nice improvement on the losses that the analystsforecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the ten analysts covering 21Vianet Group provided consensus estimates of US$938.4m revenue in 2021, which would reflect a painful 78% decline on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 100% to US$0.028. Before this earnings announcement, the analysts had been modelling revenues of US$6.18b and losses of US$0.17 per share in 2021. We can see there's definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to next year's revenue estimates, while at the same time reducing their loss estimates.
The consensus price target rose 7.5% to CN¥244, with the analysts increasingly optimistic about shrinking losses, despite the expected decline in sales. 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 21Vianet Group, with the most bullish analyst valuing it at CN¥42.45 and the most bearish at CN¥29.50 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting 21Vianet Group is an easy business to forecast or the the analysts are all using similar assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the 21Vianet Group's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 78% revenue decline a notable change from historical growth of 1.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 14% annually for the foreseeable future. It's pretty clear that 21Vianet Group's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings per share are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 21Vianet Group going out to 2024, 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 21Vianet Group that we have uncovered.
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