It's shaping up to be a tough period for Qianhe Condiment and Food Co., Ltd. (SHSE:603027), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥694m, statutory earnings missed forecasts by 18%, coming in at just CN¥0.09 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Qianhe Condiment and Food after the latest results.
After the latest results, the eight analysts covering Qianhe Condiment and Food are now predicting revenues of CN¥3.40b in 2024. If met, this would reflect a modest 4.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to rise 2.7% to CN¥0.52. In the lead-up to this report, the analysts had been modelling revenues of CN¥3.72b and earnings per share (EPS) of CN¥0.63 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
The consensus price target fell 15% to CN¥16.56, with the weaker earnings outlook clearly leading valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Qianhe Condiment and Food, with the most bullish analyst valuing it at CN¥21.86 and the most bearish at CN¥10.90 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.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Qianhe Condiment and Food's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 8.4% growth on an annualised basis. This is compared to a historical growth rate of 21% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. Factoring in the forecast slowdown in growth, it seems obvious that Qianhe Condiment and Food is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Qianhe Condiment and Food. 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. 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.
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 estimates - from multiple Qianhe Condiment and Food analysts - going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Qianhe Condiment and Food that you need to take into consideration.
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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.
