The analysts might have been a bit too bullish on Anhui Honglu Steel Construction(Group) CO., LTD (SZSE:002541), given that the company fell short of expectations when it released its quarterly results last week. Anhui Honglu Steel Construction(Group) reported an earnings miss, with CN¥4.4b revenues falling 15% short of analyst models, and statutory earnings per share (EPS) of CN¥0.29 also coming in slightly below expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Anhui Honglu Steel Construction(Group) after the latest results.
After the latest results, the 14 analysts covering Anhui Honglu Steel Construction(Group) are now predicting revenues of CN¥26.7b in 2024. If met, this would reflect a decent 16% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to expand 14% to CN¥1.96. In the lead-up to this report, the analysts had been modelling revenues of CN¥27.0b and earnings per share (EPS) of CN¥1.91 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of CN¥25.43, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Anhui Honglu Steel Construction(Group) analyst has a price target of CN¥42.46 per share, while the most pessimistic values it at CN¥20.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. We can infer from the latest estimates that forecasts expect a continuation of Anhui Honglu Steel Construction(Group)'shistorical trends, as the 22% annualised revenue growth to the end of 2024 is roughly in line with the 19% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 10% annually. So it's pretty clear that Anhui Honglu Steel Construction(Group) is forecast to grow substantially faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Anhui Honglu Steel Construction(Group)'s earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at CN¥25.43, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Anhui Honglu Steel Construction(Group) going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for Anhui Honglu Steel Construction(Group) (1 is a bit unpleasant!) that you need to take into consideration.
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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.