It's shaping up to be a tough period for Guangzhou Guanggang Gases & Energy Co.,Ltd. (SHSE:688548), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. Unfortunately, Guangzhou Guanggang Gases & EnergyLtd delivered a serious earnings miss. Revenues of CN¥512m were 14% below expectations, and statutory earnings per share of CN¥0.05 missed estimates by 23%. 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. 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 consensus forecast from Guangzhou Guanggang Gases & EnergyLtd's five analysts is for revenues of CN¥2.14b in 2024. This reflects a notable 12% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 5.8% to CN¥0.24. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥2.21b and earnings per share (EPS) of CN¥0.27 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

The consensus price target fell 9.4% to CN¥11.10, with the weaker earnings outlook clearly leading valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Guangzhou Guanggang Gases & EnergyLtd at CN¥12.20 per share, while the most bearish prices it at CN¥10.00. This is a very narrow spread of estimates, implying either that Guangzhou Guanggang Gases & EnergyLtd is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Guangzhou Guanggang Gases & EnergyLtd's rate of growth is expected to accelerate meaningfully, with the forecast 25% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 8.2% over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Guangzhou Guanggang Gases & EnergyLtd 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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will 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 Guangzhou Guanggang Gases & EnergyLtd's future valuation.

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

However, before you get too enthused, we've discovered 2 warning signs for Guangzhou Guanggang Gases & EnergyLtd (1 can't be ignored!) that you should be aware of.

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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.

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