It's been a good week for investors in Asia Vital Components Ltd (TWSE:3017). The company's shares rose 9.3% to close at NT$585 following the release of its quarterly results. Overall, reliable results, with revenues of NT$15b and statutory earnings per share of NT$4.08, were in line with analysts' expectations, showing that Asia Vital Components is performing in line with expectations. Analysts typically update their forecasts with each earnings release, and we can gauge from their expectations whether their view of the company has changed or if there are any new concerns. We've gathered the latest statutory forecasts to see if the analysts have changed their earnings models following these results.
View our latest analysis of Asia Key Components
TWSE:3017 Earnings and Revenue Growth August 13, 2024
Taking into account the latest financial results, the latest consensus for Asia Vital Components from 10 analysts is for revenues of NT$72.0b in 2024. If achieved, this would represent a solid 12% increase on revenues over the last 12 months. Earnings per share are expected to rise 22% to NT$21.02. However, prior to the latest earnings release, the analysts were forecasting revenues of NT$72.1b and earnings per share (EPS) of NT$20.07 in 2024. It seems that the analysts are becoming more bullish on the business, judging by the new earnings per share estimates.
The consensus price target remains unchanged at NT$863, suggesting that the improved earnings outlook is not expected to have a long-term impact on shareholder value creation. However, it may not be wise to fixate on a single price target, as the consensus price target is effectively the average of analysts' price targets. As a result, some investors prefer to look at the range of estimates to see if there are any divergences in opinion on the company's valuation. There are mixed perceptions on Asia Vital Components, with the most bullish analyst valuing it at NT$1,000 per share and the most bearish at NT$700. As we can see, analysts are not unanimous on the stock's future, but the range of estimates is still fairly narrow, which may suggest that the outcome is not entirely unpredictable.
To look at these forecasts from a different perspective, we need to see the bigger picture – how well the forecasts compare to past performance and whether the forecasts are bullish or bearish relative to other companies in the industry. From the latest forecasts, we can see that Asia Vital Components' growth rate is expected to accelerate significantly, with projected revenue growth of 16% per year by the end of 2024 being significantly faster than the historical growth rate of 13% per year over the past five years. Compare this to other companies in the industry, which have forecast revenue growth of 20% per year. It is clear that while future growth prospects are brighter than in recent years, Asia Vital Components' growth is expected to be slower than the industry as a whole.
Conclusion
Most importantly here, analysts raised their earnings per share forecasts, suggesting a clear increase in optimism for Asia Vital Components following these results. On the plus side, there were no major changes to revenue forecasts, but the forecasts suggest the company will perform worse than the broader industry. The consensus price target remained stable at NT$863, with the latest forecasts not having much of an impact on the target price.
With that in mind, we probably shouldn't draw any premature conclusions about Asia Vital Components. Long-term earnings strength is much more important than next year's profits. We have forecasts for Asia Vital Components out to 2026, and you can see them free of charge on our platform.
With that being said, the threat of investment risk is always present and should be considered, Asia Vital Components has 1 warning sign , and understanding this should be part of your investment process.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
