Investors in HUAYU Automotive Systems Company Limited (SHSE:600741) had a good week, as its shares rose 8.5% to close at CN¥14.75 following the release of its second-quarter results. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥40b, statutory earnings beat expectations 8.0%, with HUAYU Automotive Systems reporting profits of CN¥0.51 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Taking into account the latest results, the current consensus from HUAYU Automotive Systems' 14 analysts is for revenues of CN¥173.1b in 2024. This would reflect a reasonable 2.5% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to dip 7.4% to CN¥2.13 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥177.5b and earnings per share (EPS) of CN¥2.25 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 8.2% to CN¥19.01. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic HUAYU Automotive Systems analyst has a price target of CN¥23.00 per share, while the most pessimistic values it at CN¥13.40. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of HUAYU Automotive Systems'historical trends, as the 5.1% annualised revenue growth to the end of 2024 is roughly in line with the 4.8% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 18% per year. So it's pretty clear that HUAYU Automotive Systems is expected to grow slower than similar companies in the same industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for HUAYU Automotive Systems. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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.

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 HUAYU Automotive Systems analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for HUAYU Automotive Systems 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.