Shenzhen Fuanna Bedding and Furnishing Co.,Ltd (SZSE:002327) shareholders are probably feeling a little disappointed, since its shares fell 7.3% to CN¥6.99 in the week after its latest second-quarter results. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥656m, statutory earnings were in line with expectations, at CN¥0.69 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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, Shenzhen Fuanna Bedding and FurnishingLtd's eight analysts currently expect revenues in 2024 to be CN¥3.08b, approximately in line with the last 12 months. Statutory per share are forecast to be CN¥0.69, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of CN¥3.27b and earnings per share (EPS) of CN¥0.76 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the CN¥10.53 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Shenzhen Fuanna Bedding and FurnishingLtd at CN¥12.93 per share, while the most bearish prices it at CN¥10.95. This is a very narrow spread of estimates, implying either that Shenzhen Fuanna Bedding and FurnishingLtd 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. We would highlight that Shenzhen Fuanna Bedding and FurnishingLtd's revenue growth is expected to slow, with the forecast 0.9% annualised growth rate until the end of 2024 being well below the historical 2.0% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% per year. Factoring in the forecast slowdown in growth, it seems obvious that Shenzhen Fuanna Bedding and FurnishingLtd is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shenzhen Fuanna Bedding and FurnishingLtd. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target held steady at CN¥10.53, with the latest estimates not enough to have an impact on their price targets.

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. At Simply Wall St, we have a full range of analyst estimates for Shenzhen Fuanna Bedding and FurnishingLtd going out to 2026, and you can see them free on our platform here..

Even so, be aware that Shenzhen Fuanna Bedding and FurnishingLtd is showing 1 warning sign in our investment analysis , you should know about...

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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.