Shandong Sinocera Functional Material Co., Ltd. (SZSE:300285) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. Shandong Sinocera Functional Material reported an earnings miss, with CN¥1.1b revenues falling 12% short of analyst models, and statutory earnings per share (EPS) of CN¥0.20 also coming in slightly below expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Taking into account the latest results, the current consensus from Shandong Sinocera Functional Material's 14 analysts is for revenues of CN¥4.33b in 2024. This would reflect a notable 9.3% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to bounce 27% to CN¥0.74. In the lead-up to this report, the analysts had been modelling revenues of CN¥4.55b and earnings per share (EPS) of CN¥0.77 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

The consensus price target fell 7.0% to CN¥25.08, with the weaker earnings outlook clearly leading valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Shandong Sinocera Functional Material, with the most bullish analyst valuing it at CN¥28.00 and the most bearish at CN¥19.98 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Shandong Sinocera Functional Material'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. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Shandong Sinocera Functional Material is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shandong Sinocera Functional Material. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Shandong Sinocera Functional Material. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Shandong Sinocera Functional Material analysts - going out to 2026, and you can see them free on our platform here.

It might also be worth considering whether Shandong Sinocera Functional Material's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, 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.

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