Compal Electronics, Inc. Just Missed Earnings - But Analysts Have Updated Their Models

Investors in Compal Electronics, Inc. (TWSE:2324) had a good week, as its shares rose 3.6% to close at NT$37.80 following the release of its yearly results. It looks like the results were a bit of a negative overall. While revenues of NT$947b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 8.5% to hit NT$1.75 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Compal Electronics

Taking into account the latest results, the current consensus from Compal Electronics' nine analysts is for revenues of NT$982.5b in 2024. This would reflect an okay 3.8% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 36% to NT$2.39. Yet prior to the latest earnings, the analysts had been anticipated revenues of NT$1.03t and earnings per share (EPS) of NT$2.36 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The average price target was steady at NT$34.47even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Compal Electronics at NT$42.00 per share, while the most bearish prices it at NT$28.00. 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.

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. It's clear from the latest estimates that Compal Electronics' rate of growth is expected to accelerate meaningfully, with the forecast 3.8% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 1.8% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 16% annually. So it's clear that despite the acceleration in growth, Compal Electronics is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings per share are more important to value creation for shareholders. 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 in mind, we wouldn't be too quick to come to a conclusion on Compal Electronics. Long-term earnings power is much more important than next year's profits. We have forecasts for Compal Electronics going out to 2025, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Compal Electronics that you need to take into consideration.

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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.