It's been a good week for First Tractor Company Limited (HKG:38) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.8% to HK$7.60. It was a negative result overall, with revenues coming in 12% less than what the analysts expected, at CN¥3.2b. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from First Tractor's three analysts is for revenues of CN¥14.0b in 2027. This reflects a decent 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 37% to CN¥1.06. Before this earnings report, the analysts had been forecasting revenues of CN¥13.9b and earnings per share (EPS) of CN¥1.10 in 2027. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
Check out our latest analysis for First Tractor
It might be a surprise to learn that the consensus price target was broadly unchanged at HK$14.72, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting First Tractor's growth to accelerate, with the forecast 12% annualised growth to the end of 2027 ranking favourably alongside historical growth of 1.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 15% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, First Tractor is expected to grow slower than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for First Tractor. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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.
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 forecasts for First Tractor going out to 2028, 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 1 warning sign for First Tractor that you need to be mindful of.
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