Shengda Resources Co.,Ltd. (SZSE:000603) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The stock price has risen 7.7% to CN¥14.63 over the past week, suggesting investors are becoming more optimistic. Could this big upgrade push the stock even higher?
Following the latest upgrade, the current consensus, from the three analysts covering Shengda ResourcesLtd, is for revenues of CN¥2.0b in 2024, which would reflect a definite 8.9% reduction in Shengda ResourcesLtd's sales over the past 12 months. Statutory earnings per share are presumed to soar 86% to CN¥0.58. Before this latest update, the analysts had been forecasting revenues of CN¥1.7b and earnings per share (EPS) of CN¥0.52 in 2024. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
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. One more thing stood out to us about these estimates, and it's the idea that Shengda ResourcesLtd's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 8.9% to the end of 2024. This tops off a historical decline of 1.2% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 10% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Shengda ResourcesLtd to suffer worse than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. With a serious upgrade to expectations, it might be time to take another look at Shengda ResourcesLtd.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Shengda ResourcesLtd analysts - 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.
