The analysts covering Jihua Group Corporation Limited (SHSE:601718) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the most recent consensus for Jihua Group from its twin analysts is for revenues of CN¥12b in 2024 which, if met, would be a modest 2.8% increase on its sales over the past 12 months. Statutory earnings per share are presumed to jump 57% to CN¥0.065. Previously, the analysts had been modelling revenues of CN¥14b and earnings per share (EPS) of CN¥0.085 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Jihua Group's past performance and to peers in the same industry. For example, we noticed that Jihua Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 2.8% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 12% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 20% annually for the foreseeable future. So although Jihua Group's revenue growth is expected to improve, it is still expected to grow slower than the industry.

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. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Jihua Group's revenues are expected to grow slower than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Jihua Group, and a few readers might choose to steer clear of the stock.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Jihua Group going out as far as 2026, 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.

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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.