Earnings Beat: Full Truck Alliance Co. Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Full Truck Alliance Co. Ltd. (NYSE:YMM) just released its first-quarter report and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of CN¥1.7b, some 4.3% above estimates, and statutory earnings per share (EPS) coming in at CN¥0.38, 100% ahead of expectations. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Full Truck Alliance

Taking into account the latest results, the current consensus from Full Truck Alliance's ten analysts is for revenues of CN¥8.14b in 2023, which would reflect a notable 15% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 73% to CN¥1.63. In the lead-up to this report, the analysts had been modelling revenues of CN¥8.10b and earnings per share (EPS) of CN¥0.88 in 2023. Although the revenue estimates have not really changed, we can see there's been a massive increase in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

The consensus price target was unchanged at US$11.35, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Full Truck Alliance analyst has a price target of US$14.97 per share, while the most pessimistic values it at US$7.95. This is a very narrow spread of estimates, implying either that Full Truck Alliance is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. We would highlight that Full Truck Alliance's revenue growth is expected to slow, with the forecast 20% annualised growth rate until the end of 2023 being well below the historical 44% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.8% per year. Even after the forecast slowdown in growth, it seems obvious that Full Truck Alliance is also expected to grow faster 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 Full Truck Alliance following these results. 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. The consensus price target held steady at US$11.35, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Full Truck Alliance going out to 2025, and you can see them free on our platform here.

We also provide an overview of the Full Truck Alliance Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.