Farasis Energy (Gan Zhou) Co., Ltd. Beat Analyst Profit Forecasts, And Analysts Have New Estimates

Investors in Farasis Energy (Gan Zhou) Co., Ltd. (SHSE:688567) had a good week, as its shares rose 3.9% to close at CN¥8.70 following the release of its quarterly results. It was a solid earnings report, with revenues and earnings both coming in very strong. Revenues were 15% higher than the analysts had forecast, at CN¥4.0b, while the company also delivered a surprise statutory profit, against analyst expectations of a loss. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Farasis Energy (Gan Zhou)

After the latest results, the consensus from Farasis Energy (Gan Zhou)'s four analysts is for revenues of CN¥15.3b in 2024, which would reflect a small 7.0% decline in revenue compared to the last year of performance. Earnings are expected to improve, with Farasis Energy (Gan Zhou) forecast to report a statutory profit of CN¥0.28 per share. In the lead-up to this report, the analysts had been modelling revenues of CN¥16.1b and earnings per share (EPS) of CN¥0.28 in 2024. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.

It will come as no surprise then, that the consensus price target fell 21% to CN¥9.10following these changes. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Farasis Energy (Gan Zhou), with the most bullish analyst valuing it at CN¥15.00 and the most bearish at CN¥7.70 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that revenue is expected to reverse, with a forecast 14% annualised decline to the end of 2024. That is a notable change from historical growth of 54% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 16% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Farasis Energy (Gan Zhou) is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 Farasis Energy (Gan Zhou) going out to 2026, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months 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.