Zhejiang Huayou Cobalt Co., Ltd (SHSE:603799) shareholders are probably feeling a little disappointed, since its shares fell 2.8% to CN¥21.51 in the week after its latest half-yearly results. Revenues of CN¥30b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of CN¥1.00 an impressive 64% ahead of estimates. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the ten analysts covering Zhejiang Huayou Cobalt are now predicting revenues of CN¥67.9b in 2024. If met, this would reflect a credible 7.7% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be CN¥1.74, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥71.6b and earnings per share (EPS) of CN¥2.06 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.
It'll come as no surprise then, to learn that the analysts have cut their price target 7.0% to CN¥27.41. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Zhejiang Huayou Cobalt, with the most bullish analyst valuing it at CN¥32.55 and the most bearish at CN¥21.40 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. We would highlight that Zhejiang Huayou Cobalt's revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2024 being well below the historical 31% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.6% per year. Even after the forecast slowdown in growth, it seems obvious that Zhejiang Huayou Cobalt is also expected to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Zhejiang Huayou Cobalt. 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 fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Zhejiang Huayou Cobalt's future valuation.
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 estimates - from multiple Zhejiang Huayou Cobalt analysts - going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Zhejiang Huayou Cobalt has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
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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.