For stockholders of China YuHua Education Corporation Limited (HKG:6169), it has been an impressive week because the firm has just posted its latest annual profits and the results are good: an increase of 6.7 percent.
The company's profits of 1.7 billion yuan exceeded analysts' projections by 2.5 percent, but earnings per share came in 27 percent lower than the estimated 0.15 per share.
Analysts usually review their predictions for each earnings report to determine whether their opinion of the sector has improved or whether there are new issues that need to be addressed.
Taking into consideration the latest data, the consensus forecast by 13 analysts for China YuHua Education is 2.37 billion yuan in revenues in the early part of next year.
Solid Q4 rally
The figure is a 35 percent increase in the company's sales during the past four quarters. Earnings per share were expected to grow 0.29 percent to 0.29 yuan. In the run-up to this report, market observers were modeling 2.25 billion revenue and 0.27 EPS in 2020.
In spite of the revisions to both sales and EPS projections for 2020, analysts noted that there seems to have been a modest uplift in investor expectations following the latest reports.
With these improvements, Wall Street is not surprised to see analysts jacking up its price target to 5.43 yuan a share by 9.3 percent. Nonetheless, this is not the only inference they may draw from this information, as some stockholders also like to include the difference in projections when monitoring price targets.
Broader perspective
The most optimistic analyst actually rates China YuHua Education at 8.47 cents per share, while the most bearish expectations are at 3.71 cents per share.
Some traders take a broader overview by determining how other analysts' forecasts compare with the past performance of China YuHua Education as well as peers in the same market.
From the latest estimates, it is clear that the growth rate of China Yuhua Education is expected to significantly accelerate, with revenue growth is seen to rise 38 percent faster than its historic growth of 22 percent per annum in the last six years.
On the other side, data also indicate that other firms in the similar field are expected to hike their sales target at 21 percent per year. While the development forecast is better than the recent past, it seems clear that investors are also anticipating China YuHua Education to grow faster compared to its rivals in the broader market.
China Yuhua Education Corp is an investment holding firm that provides formal kindergarten to non-vocational university educational services in Henan, China.
