Chacha Food Company, Limited (SZSE:002557) just released its latest second-quarter report and things are not looking great. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥1.1b missed by 14%, and statutory earnings per share of CN¥0.19 fell short of forecasts by 27%. 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.

Taking into account the latest results, the most recent consensus for Chacha Food Company from 15 analysts is for revenues of CN¥7.50b in 2024. If met, it would imply a reasonable 6.8% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to rise 8.9% to CN¥1.89. In the lead-up to this report, the analysts had been modelling revenues of CN¥7.65b and earnings per share (EPS) of CN¥2.06 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The average price target fell 5.4% to CN¥39.74, with reduced earnings forecasts clearly tied to a lower valuation estimate. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Chacha Food Company, with the most bullish analyst valuing it at CN¥52.25 and the most bearish at CN¥27.80 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. It's clear from the latest estimates that Chacha Food Company's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 9.8% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Chacha Food Company to grow faster 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 Chacha Food Company. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue 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 Chacha Food Company's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Chacha Food Company. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Chacha Food Company analysts - going out to 2026, and you can see them free on our platform here.

You can also see our analysis of Chacha Food Company's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.