The analysts covering Arrow Home Group Co., Ltd. (SZSE:001322) 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) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After the downgrade, the consensus from Arrow Home Group's ten analysts is for revenues of CN¥7.2b in 2024, which would reflect a perceptible 6.5% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to drop 12% to CN¥0.30 in the same period. Before this latest update, the analysts had been forecasting revenues of CN¥8.3b and earnings per share (EPS) of CN¥0.47 in 2024. Indeed, we can see that the analysts are a lot more bearish about Arrow Home Group's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Analysts made no major changes to their price target of CN¥9.56, suggesting the downgrades are not expected to have a long-term impact on Arrow Home Group's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 13% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 10% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 15% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Arrow Home Group is expected to lag the wider 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 Arrow Home Group's revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Arrow Home Group after the downgrade.

Still, 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 Arrow Home Group going out to 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 backed by insiders.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.