Earnings Release: Here's Why Analysts Cut Their Beijing Worldia Diamond Tools Co.,Ltd. (SHSE:688028) Price Target To CN¥22.00

Investors in Beijing Worldia Diamond Tools Co.,Ltd. (SHSE:688028) had a good week, as its shares rose 6.2% to close at CN¥15.64 following the release of its full-year results. It was a credible result overall, with revenues of CN¥603m and statutory earnings per share of CN¥0.64 both in line with analyst estimates, showing that Beijing Worldia Diamond ToolsLtd is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.

See our latest analysis for Beijing Worldia Diamond ToolsLtd

Following the latest results, Beijing Worldia Diamond ToolsLtd's one analyst are now forecasting revenues of CN¥754.0m in 2024. This would be a major 25% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 42% to CN¥0.91. Before this earnings report, the analyst had been forecasting revenues of CN¥782.9m and earnings per share (EPS) of CN¥0.98 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

It'll come as no surprise then, to learn that the analyst has cut their price target 15% to CN¥22.00.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Beijing Worldia Diamond ToolsLtd's rate of growth is expected to accelerate meaningfully, with the forecast 25% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 18% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 17% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Beijing Worldia Diamond ToolsLtd to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Beijing Worldia Diamond ToolsLtd. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Beijing Worldia Diamond ToolsLtd. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Beijing Worldia Diamond ToolsLtd going out as far as 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Beijing Worldia Diamond ToolsLtd 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.