Today is shaping up negative for Joyoung Co.,Ltd (SZSE:002242) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from JoyoungLtd's 16 analysts is for revenues of CN¥10b in 2024, which would reflect a reasonable 5.0% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 23% to CN¥0.63. Prior to this update, the analysts had been forecasting revenues of CN¥11b and earnings per share (EPS) of CN¥0.86 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 13% to CN¥12.37.

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. The analysts are definitely expecting JoyoungLtd's growth to accelerate, with the forecast 5.0% annualised growth to the end of 2024 ranking favourably alongside historical growth of 3.0% per annum 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 9.9% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, JoyoungLtd is expected to grow slower than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for JoyoungLtd. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that JoyoungLtd's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of JoyoungLtd.

In light of the downgrade, our automated discounted cash flow valuation tool suggests that JoyoungLtd could now be moderately overvalued. Find out why, and see how we estimate the valuation for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.