KE Holdings Inc. Just Missed Earnings - But Analysts Have Updated Their Models
Shareholders might have noticed that KE Holdings Inc. (NYSE:BEKE) filed its full-year result this time last week. The early response was not positive, with shares down 8.1% to US$55.95 in the past week. Sales of CN¥70b surpassed estimates by 3.5%, although statutory earnings per share missed badly, coming in 51% below expectations at CN¥0.95 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on KE Holdings after the latest results.
View our latest analysis for KE Holdings
After the latest results, the eleven analysts covering KE Holdings are now predicting revenues of CN¥90.6b in 2021. If met, this would reflect a sizeable 28% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 356% to CN¥4.43. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥90.5b and earnings per share (EPS) of CN¥4.29 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of CN¥507, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values KE Holdings at CN¥94.16 per share, while the most bearish prices it at CN¥67.01. This is a very narrow spread of estimates, implying either that KE Holdings is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the KE Holdings' past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of KE Holdings'historical trends, as the 28% annualised revenue growth to the end of 2021 is roughly in line with the 31% annual revenue growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 14% per year. So although KE Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around KE Holdings' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at CN¥507, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple KE Holdings analysts - going out to 2025, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for KE Holdings you should be aware of.
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.
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