The analysts might have been a bit too bullish on Shenzhen Sunline Tech Co., Ltd. (SZSE:300348), given that the company fell short of expectations when it released its full-year results last week. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥1.9b missed by 13%, and statutory earnings per share of CN¥0.044 fell short of forecasts by 72%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Taking into account the latest results, the current consensus from Shenzhen Sunline Tech's seven analysts is for revenues of CN¥2.27b in 2024. This would reflect a solid 19% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 518% to CN¥0.27. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥2.69b and earnings per share (EPS) of CN¥0.27 in 2024. Indeed we can see that the consensus opinion has undergone some fundamental changes following the latest results, with a real cut to revenues and some minor tweaks to earnings numbers.

The average price target was reduced 8.0% to CN¥10.62, with the lower revenue forecasts indicating negative sentiment towards Shenzhen Sunline Tech, even though earnings forecasts were unchanged. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Shenzhen Sunline Tech, with the most bullish analyst valuing it at CN¥13.25 and the most bearish at CN¥7.88 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Shenzhen Sunline Tech shareholders.

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 clear from the latest estimates that Shenzhen Sunline Tech's rate of growth is expected to accelerate meaningfully, with the forecast 19% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 13% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 20% annually. Shenzhen Sunline Tech is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. 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. Even so, long term profitability is more important for the value creation process. 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 Shenzhen Sunline Tech going out to 2026, and you can see them free on our platform here..

You can also see our analysis of Shenzhen Sunline Tech's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.