Yahoo Finance JD.com, Inc. Just Recorded A 57% EPS Beat: Here's What Analysts Are Forecasting Next
Investors in JD.com, Inc. (NASDAQ:JD) had a good week, as its shares rose 3.9% to close at US$41.46 following the release of its yearly results. It looks like a credible result overall - although revenues of CN¥577b were what analysts expected, JD.com surprised by delivering a (statutory) profit of CN¥8.21 per share, an impressive 57% above what analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 JD.com
Following the latest results, JD.com's 35 analysts are now forecasting revenues of CN¥679.2b in 2020. This would be a meaningful 18% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to tumble 34% to CN¥5.49 in the same period. In the lead-up to this report, analysts had been modelling revenues of CN¥678.1b and earnings per share (EPS) of CN¥6.04 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
Despite cutting their earnings forecasts, analysts have lifted their price target 9.7% to CN¥326, suggesting that these impacts are not expected to weigh on the stock's value in the long term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic JD.com analyst has a price target of CN¥418 per share, while the most pessimistic values it at CN¥234. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await JD.com shareholders.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. It's pretty clear that analysts expect JD.com's revenue growth will slow down substantially, with revenues next year expected to grow 18%, compared to a historical growth rate of 29% over the past five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 16% per year. So it's pretty clear that, while JD.com's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for JD.com. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple JD.com analysts - going out to 2024, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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