These Analysts Just Made A Notable Downgrade To Their Foshan Electrical and Lighting Co.,Ltd (SZSE:000541) EPS Forecasts

The latest analyst coverage could presage a bad day for Foshan Electrical and Lighting Co.,Ltd (SZSE:000541), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. The stock price has risen 9.0% to CN¥5.44 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After this downgrade, Foshan Electrical and LightingLtd's five analysts are now forecasting revenues of CN¥11b in 2024. This would be a meaningful 17% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 28% to CN¥0.24. Before this latest update, the analysts had been forecasting revenues of CN¥13b and earnings per share (EPS) of CN¥0.32 in 2024. Indeed, we can see that the analysts are a lot more bearish about Foshan Electrical and LightingLtd's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Foshan Electrical and LightingLtd

The consensus price target fell 22% to CN¥7.10, with the weaker earnings outlook clearly leading analyst valuation estimates.

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 Foshan Electrical and LightingLtd's revenue growth is expected to slow, with the forecast 17% annualised growth rate until the end of 2024 being well below the historical 25% p.a. growth over the last five years. Compare this to the 304 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 18% per year. Factoring in the forecast slowdown in growth, it looks like Foshan Electrical and LightingLtd is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Foshan Electrical and LightingLtd. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Foshan Electrical and LightingLtd.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Foshan Electrical and LightingLtd going out to 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.