One thing we could say about the analysts on Guizhou Zhenhua E-chem Inc. (SHSE:688707) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

After the downgrade, the consensus from Guizhou Zhenhua E-chem's three analysts is for revenues of CN¥6.4b in 2024, which would reflect a measurable 7.6% decline in sales compared to the last year of performance. Per-share earnings are expected to surge 212% to CN¥0.63. Previously, the analysts had been modelling revenues of CN¥13b and earnings per share (EPS) of CN¥1.97 in 2024. Indeed, we can see that the analysts are a lot more bearish about Guizhou Zhenhua E-chem's prospects, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 7.5% to CN¥27.93, with the weaker earnings outlook clearly leading analyst valuation estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Guizhou Zhenhua E-chem's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 7.6% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 35% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 19% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Guizhou Zhenhua E-chem is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Guizhou Zhenhua E-chem. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Guizhou Zhenhua E-chem.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Guizhou Zhenhua E-chem analysts - going out to 2025, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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.