The latest analyst coverage could presage a bad day for Shede Spirits Co., Ltd. (SHSE:600702), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
Following the downgrade, the latest consensus from Shede Spirits' eleven analysts is for revenues of CN¥7.1b in 2024, which would reflect a modest 4.3% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 8.5% to CN¥4.73. Prior to this update, the analysts had been forecasting revenues of CN¥8.0b and earnings per share (EPS) of CN¥5.93 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.
The consensus price target fell 15% to CN¥88.75, with the weaker earnings outlook clearly leading analyst valuation estimates.
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 would highlight that Shede Spirits' revenue growth is expected to slow, with the forecast 4.3% annualised growth rate until the end of 2024 being well below the historical 24% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it seems obvious that Shede Spirits is also expected to grow slower than other industry participants.
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 Shede Spirits' revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Shede Spirits.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Shede Spirits' financials, such as concerns around earnings quality. Learn more, and discover the 1 other warning sign we've identified, for 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 with high insider ownership.
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