Jiangsu Yangnong Chemical Co., Ltd. (SHSE:600486) just released its latest second-quarter report and things are not looking great. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (CN¥2.5b) coming in 43% below what they had expected. Statutory earnings per share of CN¥0.82 fell 44% short. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Taking into account the latest results, the current consensus from Jiangsu Yangnong Chemical's twelve analysts is for revenues of CN¥13.0b in 2024. This would reflect a huge 29% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 9.0% to CN¥3.23. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥13.5b and earnings per share (EPS) of CN¥4.07 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 9.2% to CN¥68.61. 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 Jiangsu Yangnong Chemical analyst has a price target of CN¥82.00 per share, while the most pessimistic values it at CN¥52.36. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. It's clear from the latest estimates that Jiangsu Yangnong Chemical's rate of growth is expected to accelerate meaningfully, with the forecast 66% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 7.7% p.a. 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 15% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Jiangsu Yangnong Chemical is expected to grow much faster than its 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. They also downgraded Jiangsu Yangnong Chemical's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Jiangsu Yangnong Chemical's future valuation.

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 forecasts for Jiangsu Yangnong Chemical going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Jiangsu Yangnong Chemical , and understanding it should be part of your investment process.

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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.