The quarterly results for Dongfang Electric Corporation Limited (HKG:1072) were released last week, making it a good time to revisit its performance. It was a workmanlike result, with revenues of CN¥18b coming in 7.7% ahead of expectations, and statutory earnings per share of CN¥1.14, in line with analyst appraisals. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Following the latest results, Dongfang Electric's seven analysts are now forecasting revenues of CN¥69.9b in 2024. This would be a decent 11% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 31% to CN¥1.37. In the lead-up to this report, the analysts had been modelling revenues of CN¥69.4b and earnings per share (EPS) of CN¥1.39 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The consensus price target fell 6.9% to HK$12.70, suggesting that the analysts might have been a bit enthusiastic in their previous valuation - or they were expecting the company to provide stronger guidance in the quarterly results. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Dongfang Electric, with the most bullish analyst valuing it at HK$16.07 and the most bearish at HK$8.80 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Dongfang Electric's past performance and to peers in the same industry. It's clear from the latest estimates that Dongfang Electric's rate of growth is expected to accelerate meaningfully, with the forecast 23% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 16% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Dongfang Electric is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster 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. At Simply Wall St, we have a full range of analyst estimates for Dongfang Electric going out to 2026, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Dongfang Electric , and understanding this should be part of your investment process.

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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.