Vtech Holdings Limited Just Missed Earnings - But Analysts Have Updated Their Models
There's been a notable change in appetite for Vtech Holdings Limited (HKG:303) shares in the week since its full-year report, with the stock down 16% to HK$53.30. Revenues of US$2.0b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.53, missing estimates by 5.5%. 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 Vtech Holdings after the latest results.
Following the latest results, Vtech Holdings' three analysts are now forecasting revenues of US$2.10b in 2027. This would be an okay 3.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to climb 13% to US$0.60. In the lead-up to this report, the analysts had been modelling revenues of US$2.13b and earnings per share (EPS) of US$0.63 in 2027. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
See our latest analysis for Vtech Holdings
It might be a surprise to learn that the consensus price target was broadly unchanged at HK$69.73, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic Vtech Holdings analyst has a price target of HK$70.46 per share, while the most pessimistic values it at HK$69.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Vtech Holdings is an easy business to forecast or the the analysts are all using similar assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Vtech Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 3.7% growth to the end of 2027 on an annualised basis. That is well above its historical decline of 3.5% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 32% annually for the foreseeable future. Although Vtech Holdings' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.
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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at HK$69.73, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Vtech Holdings. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Vtech Holdings going out to 2029, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Vtech Holdings that you should be aware of.
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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.