The analysts might have been a bit too bullish on Dajin Heavy Industry Co.,Ltd. (SZSE:002487), given that the company fell short of expectations when it released its second-quarter results last week. Dajin Heavy IndustryLtd delivered a grave earnings miss, with both revenues (CN¥893m) and statutory earnings per share (CN¥0.19) falling badly short of analyst expectations. 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 current consensus from Dajin Heavy IndustryLtd's nine analysts is for revenues of CN¥5.08b in 2024. This would reflect a sizeable 40% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 53% to CN¥0.79. Before this earnings report, the analysts had been forecasting revenues of CN¥5.72b and earnings per share (EPS) of CN¥1.00 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a pretty serious reduction to earnings per share numbers as well.

The analysts made no major changes to their price target of CN¥25.72, suggesting the downgrades are not expected to have a long-term impact on Dajin Heavy IndustryLtd's valuation. 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. There are some variant perceptions on Dajin Heavy IndustryLtd, with the most bullish analyst valuing it at CN¥29.32 and the most bearish at CN¥20.24 per share. 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.

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 Dajin Heavy IndustryLtd's rate of growth is expected to accelerate meaningfully, with the forecast 97% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 19% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Dajin Heavy 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. 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 held steady at CN¥25.72, 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. We have estimates - from multiple Dajin Heavy IndustryLtd analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Dajin Heavy IndustryLtd has 1 warning sign we think 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.