News Flash: 10 Analysts Think Arrow Home Group Co., Ltd. (SZSE:001322) Earnings Are Under Threat

Market forces rained on the parade of Arrow Home Group Co., Ltd. (SZSE:001322) shareholders today, when the analysts downgraded their forecasts for this year. 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.

Following the downgrade, the consensus from ten analysts covering Arrow Home Group is for revenues of CN¥7.2b in 2024, implying a discernible 6.5% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to decline 12% to CN¥0.30 in the same period. Prior to this update, the analysts had been forecasting revenues of CN¥8.3b and earnings per share (EPS) of CN¥0.47 in 2024. Indeed, we can see that the analysts are a lot more bearish about Arrow Home Group's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Arrow Home Group

Despite the cuts to forecast earnings, there was no real change to the CN¥9.56 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 13% by the end of 2024. This indicates a significant reduction from annual growth of 10% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 15% annually for the foreseeable future. It's pretty clear that Arrow Home Group's revenues are expected to perform substantially worse than 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 Arrow Home Group. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Arrow Home Group.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Arrow Home Group analysts - 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 backed by insiders.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.