The analysts might have been a bit too bullish on Zhejiang Sanmei Chemical Industry Co.,Ltd. (SHSE:603379), given that the company fell short of expectations when it released its third-quarter results last week. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (CN¥999m) coming in 39% below what they had expected. Statutory earnings per share of CN¥0.29 fell 55% short. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Taking into account the latest results, the current consensus from Zhejiang Sanmei Chemical IndustryLtd's four analysts is for revenues of CN¥5.24b in 2025. This would reflect a sizeable 39% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 59% to CN¥1.57. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥5.41b and earnings per share (EPS) of CN¥1.66 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

The consensus price target fell 13% to CN¥47.68, with the weaker earnings outlook clearly leading valuation estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Zhejiang Sanmei Chemical IndustryLtd's growth to accelerate, with the forecast 30% annualised growth to the end of 2025 ranking favourably alongside historical growth of 2.7% per annum over the past five years. 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 Zhejiang Sanmei Chemical 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 fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Zhejiang Sanmei Chemical IndustryLtd's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Zhejiang Sanmei Chemical IndustryLtd analysts - going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for Zhejiang Sanmei Chemical IndustryLtd (1 is concerning!) that we have uncovered.

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.