As you might know, Jiangsu Hengshun Vinegar-Industry Co.,Ltd (SHSE:600305) last week released its latest first-quarter, and things did not turn out so great for shareholders. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (CN¥460m) coming in 23% below what they had expected. Statutory earnings per share of CN¥0.05 fell 28% short. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Taking into account the latest results, the most recent consensus for Jiangsu Hengshun Vinegar-IndustryLtd from seven analysts is for revenues of CN¥2.24b in 2024. If met, it would imply a solid 15% increase on its revenue over the past 12 months. Per-share earnings are expected to jump 225% to CN¥0.20. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥2.42b and earnings per share (EPS) of CN¥0.21 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

Despite the cuts to forecast earnings, there was no real change to the CN¥8.63 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. Currently, the most bullish analyst values Jiangsu Hengshun Vinegar-IndustryLtd at CN¥11.00 per share, while the most bearish prices it at CN¥6.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. The analysts are definitely expecting Jiangsu Hengshun Vinegar-IndustryLtd's growth to accelerate, with the forecast 20% annualised growth to the end of 2024 ranking favourably alongside historical growth of 3.4% 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 12% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Jiangsu Hengshun Vinegar-IndustryLtd 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 Hengshun Vinegar-IndustryLtd's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target held steady at CN¥8.63, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Jiangsu Hengshun Vinegar-IndustryLtd. Long-term earnings power is much more important than next year's profits. We have forecasts for Jiangsu Hengshun Vinegar-IndustryLtd 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 3 warning signs with Jiangsu Hengshun Vinegar-IndustryLtd (at least 1 which doesn't sit too well with us) , and understanding these should be part of your investment process.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.