Last week saw the newest yearly earnings release from Shede Spirits Co., Ltd. (SHSE:600702), an important milestone in the company's journey to build a stronger business. Revenues of CN¥7.1b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at CN¥5.35, missing estimates by 3.2%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Shede Spirits after the latest results.

Following the latest results, Shede Spirits' 13 analysts are now forecasting revenues of CN¥8.16b in 2024. This would be a notable 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to swell 14% to CN¥6.12. Before this earnings report, the analysts had been forecasting revenues of CN¥8.61b and earnings per share (EPS) of CN¥6.85 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

The consensus price target fell 12% to CN¥136, with the weaker earnings outlook clearly leading valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Shede Spirits, with the most bullish analyst valuing it at CN¥166 and the most bearish at CN¥110 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shede Spirits' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Shede Spirits' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 26% over the past five years. Compare this to the 37 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 14% per year. So it's pretty clear that, while Shede Spirits' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shede Spirits. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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. At Simply Wall St, we have a full range of analyst estimates for Shede Spirits 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 Shede Spirits (of which 1 is potentially serious!) you should know about.

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.