Shandong Linglong Tyre Co.,Ltd. Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

Shandong Linglong Tyre Co.,Ltd. (SHSE:601966) shareholders are probably feeling a little disappointed, since its shares fell 7.3% to CN¥22.52 in the week after its latest first-quarter results. Revenues were CN¥5.0b, 16% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of CN¥0.95 being in line with what the analysts forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Shandong Linglong TyreLtd

Taking into account the latest results, the current consensus from Shandong Linglong TyreLtd's nine analysts is for revenues of CN¥25.1b in 2024. This would reflect a substantial 21% increase on its revenue over the past 12 months. Per-share earnings are expected to jump 34% to CN¥1.48. In the lead-up to this report, the analysts had been modelling revenues of CN¥25.4b and earnings per share (EPS) of CN¥1.43 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of CN¥30.82, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. The most optimistic Shandong Linglong TyreLtd analyst has a price target of CN¥35.50 per share, while the most pessimistic values it at CN¥27.10. This is a very narrow spread of estimates, implying either that Shandong Linglong TyreLtd is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Shandong Linglong TyreLtd's rate of growth is expected to accelerate meaningfully, with the forecast 29% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 2.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 18% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shandong Linglong TyreLtd to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Shandong Linglong TyreLtd following these results. 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. 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 Linglong TyreLtd. Long-term earnings power is much more important than next year's profits. We have forecasts for Shandong Linglong TyreLtd going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Shandong Linglong TyreLtd that you should be aware of.

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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.