It's shaping up to be a tough period for Yantai Jereh Oilfield Services Group Co., Ltd. (SZSE:002353), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥2.8b, statutory earnings missed forecasts by an incredible 21%, coming in at just CN¥0.70 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Yantai Jereh Oilfield Services Group after the latest results.
Taking into account the latest results, the consensus forecast from Yantai Jereh Oilfield Services Group's 13 analysts is for revenues of CN¥15.2b in 2024. This reflects a notable 13% improvement in revenue compared to the last 12 months. Per-share earnings are expected to grow 12% to CN¥2.75. Before this earnings report, the analysts had been forecasting revenues of CN¥15.3b and earnings per share (EPS) of CN¥2.90 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥40.58, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. There are some variant perceptions on Yantai Jereh Oilfield Services Group, with the most bullish analyst valuing it at CN¥49.00 and the most bearish at CN¥20.00 per share. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Yantai Jereh Oilfield Services Group's rate of growth is expected to accelerate meaningfully, with the forecast 27% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 17% p.a. 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 13% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Yantai Jereh Oilfield Services Group 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is 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.
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 forecasts for Yantai Jereh Oilfield Services Group going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Yantai Jereh Oilfield Services Group that 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.
