Yahoo Finance Youdao, Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year
Last week saw the newest quarterly earnings release from Youdao, Inc. (NYSE:DAO), an important milestone in the company's journey to build a stronger business. Youdao beat expectations by 5.1% with revenues of CN¥1.4b. It also surprised on the earnings front, with an unexpected statutory profit of CN¥0.10 per share a nice improvement on the losses that the analysts forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Youdao after the latest results.
See our latest analysis for Youdao
Following the latest results, Youdao's eight analysts are now forecasting revenues of CN¥5.93b in 2024. This would be a satisfactory 5.5% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 63% to CN¥1.04. Before this latest report, the consensus had been expecting revenues of CN¥6.15b and CN¥0.90 per share in losses. So it's pretty clear the analysts have mixed opinions on Youdao after this update; revenues were downgraded and per-share losses expected to increase.
There was no major change to the consensus price target of US$6.12, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Youdao analyst has a price target of US$8.13 per share, while the most pessimistic values it at US$3.97. This is a very narrow spread of estimates, implying either that Youdao is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Youdao's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.5% growth on an annualised basis. This is compared to a historical growth rate of 30% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. Factoring in the forecast slowdown in growth, it seems obvious that Youdao is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Youdao. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 Youdao analysts - going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Youdao (1 is a bit concerning!) that you need to take into consideration.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
