As you might know, China Zhenhua (Group) Science & Technology Co., Ltd (SZSE:000733) last week released its latest second-quarter, and things did not turn out so great for shareholders. Unfortunately, China Zhenhua (Group) Science & Technology delivered a serious earnings miss. Revenues of CN¥1.4b were 18% below expectations, and statutory earnings per share of CN¥0.58 missed estimates by 23%. 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.

Taking into account the latest results, the current consensus, from the four analysts covering China Zhenhua (Group) Science & Technology, is for revenues of CN¥5.01b in 2024. This implies a chunky 15% reduction in China Zhenhua (Group) Science & Technology's revenue over the past 12 months. Statutory earnings per share are forecast to descend 11% to CN¥2.52 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥7.07b and earnings per share (EPS) of CN¥4.42 in 2024. Indeed, we can see that the analysts are a lot more bearish about China Zhenhua (Group) Science & Technology's prospects following the latest results, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.

It'll come as no surprise then, to learn that the analysts have cut their price target 37% to CN¥45.44.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the China Zhenhua (Group) Science & Technology's past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 28% annualised decline to the end of 2024. That is a notable change from historical growth of 16% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 18% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - China Zhenhua (Group) Science & Technology is expected to lag 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 China Zhenhua (Group) Science & Technology. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of China Zhenhua (Group) Science & Technology's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for China Zhenhua (Group) Science & Technology going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for China Zhenhua (Group) Science & Technology that you should be aware of.

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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.