It's been a good week for Lingyi iTech (Guangdong) Company (SZSE:002600) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.8% to CN¥5.21. It looks like a pretty bad result, all things considered. Although revenues of CN¥9.8b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 33% to hit CN¥0.07 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Lingyi iTech (Guangdong)'s six analysts are now forecasting revenues of CN¥43.6b in 2024. This would be a substantial 28% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 42% to CN¥0.42. In the lead-up to this report, the analysts had been modelling revenues of CN¥43.7b and earnings per share (EPS) of CN¥0.44 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥7.58, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. Currently, the most bullish analyst values Lingyi iTech (Guangdong) at CN¥8.60 per share, while the most bearish prices it at CN¥6.20. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Lingyi iTech (Guangdong)'s past performance and to peers in the same industry. The analysts are definitely expecting Lingyi iTech (Guangdong)'s growth to accelerate, with the forecast 39% annualised growth to the end of 2024 ranking favourably alongside historical growth of 9.9% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 18% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Lingyi iTech (Guangdong) to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Lingyi iTech (Guangdong). Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 Lingyi iTech (Guangdong) analysts - going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Lingyi iTech (Guangdong) 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.