It's been a good week for Autohome Inc. (NYSE:ATHM) shareholders, because the company has just released its latest quarterly results, and the shares gained 6.1% to US$81.62. Autohome reported in line with analyst predictions, delivering revenues of CN¥1.5b and statutory earnings per share of CN¥4.87, suggesting the business is executing well and in line with its plan. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Autohome from 15 analysts is for revenues of CN¥8.62b in 2020 which, if met, would be an okay 3.2% increase on its sales over the past 12 months. Statutory per share are forecast to be CN¥26.79, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of CN¥8.87b and earnings per share (EPS) of CN¥27.63 in 2020. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
Despite the cuts to forecast earnings, there was no real change to the US$84.09 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. There are some variant perceptions on Autohome, with the most bullish analyst valuing it at US$96.00 and the most bearish at US$70.00 per share. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Autohome's past performance and to peers in the same industry. We would highlight that Autohome's revenue growth is expected to slow, with forecast 3.2% increase next year well below the historical 20%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 16% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Autohome.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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. The consensus price target held steady at CN¥84.09, 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 Autohome going out to 2023, 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. 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. Thank you for reading.