Autohome (NYSE:ATHM) Gross Margin Drop Tests Bullish Long Term Margin Narratives

Autohome FY 2025 earnings in focus

Autohome (NYSE:ATHM) has wrapped up FY 2025 with fourth quarter revenue of about C¥1,462 million and basic EPS of roughly C¥1.94, set against a trailing twelve month EPS of C¥13.40 on revenue of about C¥6,452 million. The company has reported quarterly revenue in a range from C¥1,454 million to C¥1,778 million across FY 2025, with basic EPS between C¥1.94 and C¥3.58, giving investors a clear view of how top line and per share earnings have moved through the year. With a current net margin of 24.4%, the latest results sit within the context of a business where profitability and future upside potential are key parts of the story.

See our full analysis for Autohome.

With the numbers on the table, the next step is to see how this earnings profile compares with the most common narratives around Autohome, and where those stories may need updating.

See what the community is saying about Autohome

Margins at 24.4% meet cost pressure concerns

• Autohome reported a trailing net profit margin of 24.4%, compared with 23% a year earlier, on trailing twelve month net income of C¥1,574.8 million from C¥6,452.0 million in revenue.
• Consensus narrative points to AI tools and the O2O ecosystem supporting long term margin strength, yet:
  • Gross margin for the quarter was reported at 71.4%, compared with 81.5% a year earlier, which critics highlight as a pressure point against the more bullish margin story.
  • Bulls looking at digital partnerships and overseas expansion as long term supports still have to weigh these against the reported drop in quarterly gross margin and the five year annualized earnings decline of about 15.8%.

TTM earnings of C¥1.6b with mixed five year trend

• Over the latest twelve months, Autohome generated C¥1,574.8 million in net income (excluding extra items) and basic EPS of C¥13.40, compared with C¥1,619.6 million in net income and C¥13.36 in EPS for the prior trailing twelve month data point provided.
• Bears focus on earnings pressure, and the data gives them some support:
  • The five year earnings trend shows an annualized 15.8% decline, which sits alongside trailing twelve month net income that is lower than the earlier C¥1,619.6 million figure in the dataset.
  • Consensus narrative talks about new growth engines from AI and international expansion, but this sits next to an earnings history that has not moved in a straight line up and leaves plenty of room for different views on durability.

On top of these numbers, skeptics who focus on the earnings trend may want to see how their concerns line up with a full breakdown of the cautious case for Autohome: 🐻 Autohome Bear Case

Share price C$18.83 versus valuation signals

• With the shares at US$18.83, they sit below the DCF fair value of US$35.93 and also below the analyst price target of about US$25.85, while the current P/E of 9.6x is higher than the 8.2x peer average but below the 15.3x industry average.
• Bulls point to potential value, and the figures partly back that up:
  • The gap between the share price and the DCF fair value, plus the difference to the US$25.85 analyst target, is one reason some investors see upside potential despite the higher P/E versus peers.
  • Forecasts for revenue and earnings growth around 4.7 to 4.8% per year, together with a 24.4% net margin, are used in the bullish case to argue the current valuation does not fully reflect the earnings base that the company has reported.

If you are weighing that US$18.83 price against the fair value and analyst target, it can help to see how bullish investors connect these numbers to their thesis on Autohome: 🐂 Autohome Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Autohome on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

After all this, do you feel the story is leaning bullish or cautious? Take a moment to review the figures yourself, form your own view, and then check out 3 key rewards and 1 important warning sign to see how the balance of risks and rewards stacks up.

See What Else Is Out There

Autohome's mixed earnings trend, lower trailing twelve month net income versus the earlier data point, and questions around margin durability all point to uncertainty in its growth story.

If that uneven record has you looking for more dependable growth potential, check out 47 high quality undervalued stocks today so you can focus on companies where the valuation and fundamentals line up more clearly.

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.

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