The latest analyst coverage could presage a bad day for Hainan Drinda New Energy Technology Co., Ltd. (SZSE:002865), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following this downgrade, Hainan Drinda New Energy Technology's three analysts are forecasting 2024 revenues to be CN¥19b, approximately in line with the last 12 months. Per-share earnings are expected to surge 263% to CN¥13.02. Previously, the analysts had been modelling revenues of CN¥31b and earnings per share (EPS) of CN¥13.55 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a sizeable cut to revenue estimates and a small dip in earnings per share numbers as well.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Hainan Drinda New Energy Technology's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.2% growth on an annualised basis. This is compared to a historical growth rate of 72% 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 24% annually. Factoring in the forecast slowdown in growth, it seems obvious that Hainan Drinda New Energy Technology is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Hainan Drinda New Energy Technology going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Hainan Drinda New Energy Technology's financials, such as dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other warning signs we've identified.

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