XCMG Construction Machinery Co., Ltd. (SZSE:000425) Just Missed Earnings: Here's What Analysts Think Will Happen Next

XCMG Construction Machinery Co., Ltd. (SZSE:000425) just released its latest quarterly report and things are not looking great. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (CN¥24b) coming in 23% below what they had expected. Statutory earnings per share of CN¥0.14 fell 23% short. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for XCMG Construction Machinery

Taking into account the latest results, the consensus forecast from XCMG Construction Machinery's eight analysts is for revenues of CN¥101.6b in 2024. This reflects a notable 9.1% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 22% to CN¥0.56. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥106.6b and earnings per share (EPS) of CN¥0.65 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the CN¥7.53 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. Currently, the most bullish analyst values XCMG Construction Machinery at CN¥9.70 per share, while the most bearish prices it at CN¥5.10. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the XCMG Construction Machinery'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 12% growth on an annualised basis. That is in line with its 13% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 18% per year. So although XCMG Construction Machinery is expected to maintain its revenue growth rate, it's forecast to grow slower than 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 XCMG Construction Machinery. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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.

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 XCMG Construction Machinery 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 XCMG Construction Machinery , 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.