Yahoo Finance Analysts Have Made A Financial Statement On GDS Holdings Limited's (NASDAQ:GDS) Third-Quarter Report
Shareholders might have noticed that GDS Holdings Limited (NASDAQ:GDS) filed its quarterly result this time last week. The early response was not positive, with shares down 3.3% to US$89.81 in the past week. Revenues of CN¥1.5b beat expectations by a respectable 2.7%, although statutory losses per share increased. GDS Holdings lost CN¥1.42, which was 360% more than what the analysts had included in their models. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for GDS Holdings
Taking into account the latest results, the current consensus from GDS Holdings' 20 analysts is for revenues of CN¥8.00b in 2021, which would reflect a major 51% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 83% to CN¥0.53. Yet prior to the latest earnings, the analysts had been forecasting revenues of CN¥8.04b and losses of CN¥0.37 per share in 2021. So it's pretty clear the analysts have mixed opinions on GDS Holdings even after this update; although they reconfirmed their revenue numbers, it came at the cost of a per-share losses.
The consensus price target held steady at CN¥683, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values GDS Holdings at CN¥116 per share, while the most bearish prices it at CN¥70.29. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the GDS Holdings' past performance and to peers in the same industry. The analysts are definitely expecting GDS Holdings' growth to accelerate, with the forecast 51% growth ranking favourably alongside historical growth of 41% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 13% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that GDS Holdings is expected to grow much faster than its industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at GDS Holdings. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple GDS Holdings analysts - going out to 2024, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for GDS Holdings that you need to be mindful 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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