One thing we could say about the analysts on Zhongfu Shenying Carbon Fiber Co.,Ltd. (SHSE:688295) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
After the downgrade, the eight analysts covering Zhongfu Shenying Carbon FiberLtd are now predicting revenues of CN¥2.0b in 2024. If met, this would reflect a credible 4.8% improvement in sales compared to the last 12 months. Per-share earnings are expected to grow 11% to CN¥0.15. Previously, the analysts had been modelling revenues of CN¥2.6b and earnings per share (EPS) of CN¥0.34 in 2024. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.
The consensus price target fell 12% to US$4.61, with the weaker earnings outlook clearly leading analyst valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Zhongfu Shenying Carbon FiberLtd at US$5.76 per share, while the most bearish prices it at US$3.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Zhongfu Shenying Carbon FiberLtd shareholders.
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. One thing stands out from these estimates, which is that Zhongfu Shenying Carbon FiberLtd is forecast to grow faster in the future than it has in the past, with revenues expected to display 6.5% annualised growth until the end of 2024. If achieved, this would be a much better result than the 12% annual decline over the past year. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 16% annually for the foreseeable future. Although Zhongfu Shenying Carbon FiberLtd's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader 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 Zhongfu Shenying Carbon FiberLtd's 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 Zhongfu Shenying Carbon FiberLtd.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Zhongfu Shenying Carbon FiberLtd going out to 2026, and you can see them free on our platform here.
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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.
