It's shaping up to be a tough period for Xiamen Faratronic Co., Ltd. (SHSE:600563), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. Results look to have been somewhat negative - revenue fell 6.4% short of analyst estimates at CN¥3.9b, and statutory earnings of CN¥4.55 per share missed forecasts by 3.9%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Xiamen Faratronic after the latest results.
Taking into account the latest results, the consensus forecast from Xiamen Faratronic's ten analysts is for revenues of CN¥4.81b in 2024. This reflects a huge 24% improvement in revenue compared to the last 12 months. Per-share earnings are expected to grow 19% to CN¥5.41. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥5.44b and earnings per share (EPS) of CN¥6.21 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.
Despite the cuts to forecast earnings, there was no real change to the CN¥140 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Xiamen Faratronic analyst has a price target of CN¥170 per share, while the most pessimistic values it at CN¥117. 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.
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. We can infer from the latest estimates that forecasts expect a continuation of Xiamen Faratronic'shistorical trends, as the 24% annualised revenue growth to the end of 2024 is roughly in line with the 22% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 19% per year. So although Xiamen Faratronic is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider 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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at CN¥140, 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 forecasts for Xiamen Faratronic going out to 2026, and you can see them free on our platform here.
We also provide an overview of the Xiamen Faratronic Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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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.