Analysts Are Updating Their Advantech Co., Ltd. (TWSE:2395) Estimates After Its First-Quarter Results

Advantech Co., Ltd. (TWSE:2395) came out with its first-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues came in 2.6% below expectations, at NT$14b. Statutory earnings per share were relatively better off, with a per-share profit of NT$2.30 being roughly in line with analyst estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 Advantech

Taking into account the latest results, the current consensus from Advantech's twelve analysts is for revenues of NT$67.9b in 2024. This would reflect a decent 11% increase on its revenue over the past 12 months. Statutory per-share earnings are expected to be NT$11.52, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of NT$69.3b and earnings per share (EPS) of NT$13.03 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the NT$376 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Advantech at NT$459 per share, while the most bearish prices it at NT$290. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Advantech shareholders.

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. The analysts are definitely expecting Advantech's growth to accelerate, with the forecast 15% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 17% annually. Advantech is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Advantech. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target held steady at NT$376, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Advantech going out to 2026, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.