Last week saw the newest third-quarter earnings release from Shandong Hualu-Hengsheng Chemical Co., Ltd. (SHSE:600426), an important milestone in the company's journey to build a stronger business. It looks like a pretty bad result, all things considered. Although revenues of CN¥8.2b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 43% to hit CN¥0.39 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

After the latest results, the twelve analysts covering Shandong Hualu-Hengsheng Chemical are now predicting revenues of CN¥37.5b in 2025. If met, this would reflect a decent 13% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 46% to CN¥2.54. In the lead-up to this report, the analysts had been modelling revenues of CN¥37.6b and earnings per share (EPS) of CN¥2.59 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of CN¥31.82, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Shandong Hualu-Hengsheng Chemical, with the most bullish analyst valuing it at CN¥36.89 and the most bearish at CN¥27.69 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Shandong Hualu-Hengsheng Chemical is an easy business to forecast or the the analysts are all using similar assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Shandong Hualu-Hengsheng Chemical's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 19% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 16% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Shandong Hualu-Hengsheng Chemical.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Shandong Hualu-Hengsheng Chemical's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Shandong Hualu-Hengsheng Chemical. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Shandong Hualu-Hengsheng Chemical 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 Shandong Hualu-Hengsheng Chemical , 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.