Some Dajin Heavy Industry Co.,Ltd. (SZSE:002487) Analysts Just Made A Major Cut To Next Year's Estimates

Market forces rained on the parade of Dajin Heavy Industry Co.,Ltd. (SZSE:002487) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. Shares are up 7.7% to CN¥20.17 in the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After this downgrade, Dajin Heavy IndustryLtd's nine analysts are now forecasting revenues of CN¥5.0b in 2024. This would be a major 38% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 63% to CN¥0.83. Before this latest update, the analysts had been forecasting revenues of CN¥5.7b and earnings per share (EPS) of CN¥1.00 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

Check out our latest analysis for Dajin Heavy IndustryLtd

Analysts made no major changes to their price target of CN¥25.72, suggesting the downgrades are not expected to have a long-term impact on Dajin Heavy IndustryLtd's valuation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Dajin Heavy IndustryLtd's growth to accelerate, with the forecast 91% annualised growth to the end of 2024 ranking favourably alongside historical growth of 19% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 17% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Dajin Heavy IndustryLtd to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Dajin Heavy IndustryLtd after the downgrade.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Dajin Heavy IndustryLtd analysts - going out to 2026, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.