Earnings Miss: Zhejiang Sanhua Intelligent Controls Co.,Ltd Missed EPS By 23% And Analysts Are Revising Their Forecasts

The analysts might have been a bit too bullish on Zhejiang Sanhua Intelligent Controls Co.,Ltd (SZSE:002050), given that the company fell short of expectations when it released its quarterly results last week. Unfortunately, Zhejiang Sanhua Intelligent ControlsLtd delivered a serious earnings miss. Revenues of CN¥6.4b were 10% below expectations, and statutory earnings per share of CN¥0.17 missed estimates by 23%. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Zhejiang Sanhua Intelligent ControlsLtd

After the latest results, the 21 analysts covering Zhejiang Sanhua Intelligent ControlsLtd are now predicting revenues of CN¥31.4b in 2024. If met, this would reflect a substantial 24% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 27% to CN¥1.01. In the lead-up to this report, the analysts had been modelling revenues of CN¥32.0b and earnings per share (EPS) of CN¥1.03 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of CN¥30.84, suggesting that the company has met expectations in its recent result. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Zhejiang Sanhua Intelligent ControlsLtd at CN¥36.40 per share, while the most bearish prices it at CN¥23.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Zhejiang Sanhua Intelligent ControlsLtd's rate of growth is expected to accelerate meaningfully, with the forecast 33% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 20% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 18% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Zhejiang Sanhua Intelligent ControlsLtd to grow faster than 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Zhejiang Sanhua Intelligent ControlsLtd analysts - 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 2 warning signs with Zhejiang Sanhua Intelligent ControlsLtd , and understanding these 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.