Results: Zhejiang Weixing New Building Materials Co., Ltd. Beat Earnings Expectations And Analysts Now Have New Forecasts

There's been a notable change in appetite for Zhejiang Weixing New Building Materials Co., Ltd. (SZSE:002372) shares in the week since its second-quarter report, with the stock down 10% to CN¥11.90. Zhejiang Weixing New Building Materials' revenues suffered a catastrophic miss, falling 21% short of forecasts, at CN¥1.3b. Statutory earnings per share however performed much better, hitting CN¥0.12, 22% above forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Zhejiang Weixing New Building Materials

Taking into account the latest results, the current consensus from Zhejiang Weixing New Building Materials' 16 analysts is for revenues of CN¥6.69b in 2024. This would reflect a modest 3.1% increase on its revenue over the past 12 months. Statutory per share are forecast to be CN¥0.81, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥7.13b and earnings per share (EPS) of CN¥0.92 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¥19.82 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Zhejiang Weixing New Building Materials, with the most bullish analyst valuing it at CN¥23.80 and the most bearish at CN¥16.50 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Zhejiang Weixing New Building Materials shareholders.

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. It's pretty clear that there is an expectation that Zhejiang Weixing New Building Materials' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.3% growth on an annualised basis. This is compared to a historical growth rate of 8.8% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 15% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Zhejiang Weixing New Building Materials.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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.

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. At Simply Wall St, we have a full range of analyst estimates for Zhejiang Weixing New Building Materials 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 Zhejiang Weixing New Building Materials , 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.