Fujian Torch Electron Technology Co., Ltd. (SHSE:603678) shareholders are probably feeling a little disappointed, since its shares fell 2.3% to CN¥22.29 in the week after its latest full-year results. Statutory earnings per share disappointed, coming in -36% short of expectations, at CN¥0.69. Fortunately revenue performance was a lot stronger at CN¥3.5b arriving 19% ahead of predictions. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Taking into account the latest results, the most recent consensus for Fujian Torch Electron Technology from four analysts is for revenues of CN¥4.11b in 2024. If met, it would imply a decent 17% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 42% to CN¥0.99. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥3.63b and earnings per share (EPS) of CN¥1.43 in 2024. Although revenues are expected to increase meaningfully, the analysts have acknowledged the cost of growth, given the large cut to EPS estimates following the latest report.

The analysts also cut Fujian Torch Electron Technology's price target 7.3% to CN¥35.20, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in revenue. 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 Fujian Torch Electron Technology analyst has a price target of CN¥43.68 per share, while the most pessimistic values it at CN¥25.92. 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.

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 clear from the latest estimates that Fujian Torch Electron Technology's rate of growth is expected to accelerate meaningfully, with the forecast 17% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 10.0% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 19% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Fujian Torch Electron Technology is expected to grow at about the same rate as 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. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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 Fujian Torch Electron Technology'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 Fujian Torch Electron Technology going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for Fujian Torch Electron Technology that we have uncovered.

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