Fujian Longking Co., Ltd. Just Missed EPS By 50%: Here's What Analysts Think Will Happen Next

It's shaping up to be a tough period for Fujian Longking Co., Ltd. (SHSE:600388), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥11b missed by 13%, and statutory earnings per share of CN¥0.45 fell short of forecasts by 50%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Fujian Longking

Taking into account the latest results, the consensus forecast from Fujian Longking's three analysts is for revenues of CN¥13.5b in 2024. This reflects a huge 23% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 123% to CN¥1.05. In the lead-up to this report, the analysts had been modelling revenues of CN¥17.7b and earnings per share (EPS) of CN¥1.35 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a large cut to revenue estimates and a large cut to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.2% to CN¥19.43. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Fujian Longking analyst has a price target of CN¥23.00 per share, while the most pessimistic values it at CN¥15.86. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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 clear from the latest estimates that Fujian Longking's rate of growth is expected to accelerate meaningfully, with the forecast 23% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 3.2% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 19% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Fujian Longking is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Fujian Longking. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Fujian Longking's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Fujian Longking going out to 2026, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Fujian Longking 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.