Investors in Guoguang Electric Company Limited (SZSE:002045) had a good week, as its shares rose 2.4% to close at CN¥12.91 following the release of its third-quarter results. It was a mildly positive result, with revenues exceeding expectations at CN¥2.7b, while statutory earnings per share (EPS) of CN¥0.78 were in line with analyst forecasts. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Guoguang Electric after the latest results.
After the latest results, the five analysts covering Guoguang Electric are now predicting revenues of CN¥8.92b in 2025. If met, this would reflect a major 22% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 33% to CN¥0.71. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥8.72b and earnings per share (EPS) of CN¥0.69 in 2025. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
It will come as no surprise to learn that the analysts have increased their price target for Guoguang Electric 6.5% to CN¥16.30on the back of these upgrades. 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. There are some variant perceptions on Guoguang Electric, with the most bullish analyst valuing it at CN¥17.00 and the most bearish at CN¥15.60 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Guoguang Electric's growth to accelerate, with the forecast 17% annualised growth to the end of 2025 ranking favourably alongside historical growth of 10% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.0% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Guoguang Electric 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 Guoguang Electric's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Guoguang Electric analysts - going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Guoguang Electric 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.
