Earnings Miss: Nexteer Automotive Group Limited Missed EPS By 18% And Analysts Are Revising Their Forecasts
There's been a notable change in appetite for Nexteer Automotive Group Limited (HKG:1316) shares in the week since its yearly report, with the stock down 10% to HK$5.20. Revenues were in line with forecasts, at US$4.6b, although statutory earnings per share came in 18% below what the analysts expected, at US$0.041 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Nexteer Automotive Group's twelve analysts is for revenues of US$4.85b in 2026. This reflects an okay 5.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 34% to US$0.054. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.90b and earnings per share (EPS) of US$0.068 in 2026. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
Check out our latest analysis for Nexteer Automotive Group
The average price target fell 11% to HK$7.47, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. Currently, the most bullish analyst values Nexteer Automotive Group at HK$8.62 per share, while the most bearish prices it at HK$6.02. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Nexteer Automotive Group's past performance and to peers in the same industry. We would highlight that Nexteer Automotive Group's revenue growth is expected to slow, with the forecast 5.8% annualised growth rate until the end of 2026 being well below the historical 7.3% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 15% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Nexteer Automotive Group.
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. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Nexteer Automotive Group going out to 2028, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Nexteer Automotive Group 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.