Offshore Oil Engineering Co.,Ltd (SHSE:600583) missed earnings with its latest annual results, disappointing overly-optimistic forecasters. Offshore Oil EngineeringLtd missed analyst forecasts, with revenues of CN¥31b and statutory earnings per share (EPS) of CN¥0.37, falling short by 7.2% and 9.9% respectively. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Offshore Oil EngineeringLtd from seven analysts is for revenues of CN¥33.8b in 2024. If met, it would imply a solid 9.8% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to bounce 31% to CN¥0.48. In the lead-up to this report, the analysts had been modelling revenues of CN¥37.1b and earnings per share (EPS) of CN¥0.52 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
The analysts made no major changes to their price target of CN¥6.34, suggesting the downgrades are not expected to have a long-term impact on Offshore Oil EngineeringLtd's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Offshore Oil EngineeringLtd at CN¥7.50 per share, while the most bearish prices it at CN¥4.40. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Offshore Oil EngineeringLtd's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 9.8% growth on an annualised basis. This is compared to a historical growth rate of 22% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 15% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Offshore Oil EngineeringLtd.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Offshore Oil EngineeringLtd. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at CN¥6.34, with the latest estimates not enough to have an impact on their price targets.
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 estimates - from multiple Offshore Oil EngineeringLtd analysts - 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 Offshore Oil EngineeringLtd 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.