It's been a mediocre week for Shanghai Jahwa United Co., Ltd. (SHSE:600315) shareholders, with the stock dropping 11% to CN¥15.02 in the week since its latest quarterly results. Revenues fell badly short of expectations, with revenue of CN¥1.4b missing analyst predictions by 20%. Statutory earnings correspondingly nosedived, with Shanghai Jahwa United reporting a loss of CN¥0.03 per share, where the analysts were expecting a profit. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Following last week's earnings report, Shanghai Jahwa United's 20 analysts are forecasting 2024 revenues to be CN¥6.33b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be CN¥0.65, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of CN¥7.23b and earnings per share (EPS) of CN¥0.88 in 2024. Indeed, we can see that the analysts are a lot more bearish about Shanghai Jahwa United's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.3% to CN¥18.54. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Shanghai Jahwa United analyst has a price target of CN¥23.00 per share, while the most pessimistic values it at CN¥13.00. 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 Shanghai Jahwa United shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. From these estimates it looks as though the analysts expect the years of declining revenue to come to an end, given the flat forecast out to 2024. That would be a definite improvement, given that the past five years have seen revenue shrink 2.6% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 16% per year. Although Shanghai Jahwa United's revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Shanghai Jahwa United's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Shanghai Jahwa United. Long-term earnings power is much more important than next year's profits. We have forecasts for Shanghai Jahwa United going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Shanghai Jahwa United that you should be aware of.

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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.