Shanghai Tunnel Engineering Co., Ltd. (SHSE:600820) Analysts Are Pretty Bullish On The Stock After Recent Results

Last week saw the newest full-year earnings release from Shanghai Tunnel Engineering Co., Ltd. (SHSE:600820), an important milestone in the company's journey to build a stronger business. It was a pretty mixed result, with revenues beating expectations to hit CN¥74b. Statutory earnings fell 3.8% short of analyst forecasts, reaching CN¥0.93 per share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Shanghai Tunnel Engineering

Taking into account the latest results, the consensus forecast from Shanghai Tunnel Engineering's seven analysts is for revenues of CN¥81.9b in 2024. This reflects a decent 10% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 10.0% to CN¥1.03. Before this earnings report, the analysts had been forecasting revenues of CN¥78.9b and earnings per share (EPS) of CN¥1.06 in 2024. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a decent to revenue, the consensus also made a minor downgrade to its earnings per share forecasts.

Curiously, the consensus price target rose 5.0% to CN¥8.29. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Shanghai Tunnel Engineering, with the most bullish analyst valuing it at CN¥9.27 and the most bearish at CN¥6.90 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Shanghai Tunnel Engineering is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shanghai Tunnel Engineering's past performance and to peers in the same industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 10% growth on an annualised basis. That is in line with its 13% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 10% per year. So although Shanghai Tunnel Engineering is expected to maintain its revenue growth rate, it's only growing at about the rate of 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 Shanghai Tunnel Engineering. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 forecasts for Shanghai Tunnel Engineering 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 Shanghai Tunnel Engineering , and understanding it 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.