Today is shaping up negative for Tongling Jingda Special Magnet Wire Co., Ltd. (SHSE:600577) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the downgrade, the current consensus from Tongling Jingda Special Magnet Wire's three analysts is for revenues of CN¥20b in 2024 which - if met - would reflect a solid 9.2% increase on its sales over the past 12 months. Per-share earnings are expected to soar 27% to CN¥0.26. Prior to this update, the analysts had been forecasting revenues of CN¥22b and earnings per share (EPS) of CN¥0.27 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a minor downgrade to EPS estimates to boot.
What's most unexpected is that the consensus price target rose 11% to CN¥4.87, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Tongling Jingda Special Magnet Wire'shistorical trends, as the 12% annualised revenue growth to the end of 2024 is roughly in line with the 11% annual revenue 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 18% per year. So it's pretty clear that Tongling Jingda Special Magnet Wire is expected to grow slower than similar companies in the same industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Tongling Jingda Special Magnet Wire. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Tongling Jingda Special Magnet Wire going forwards.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Tongling Jingda Special Magnet Wire going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.