Analysts Are More Bearish On Shanghai Liangxin Electrical Co.,LTD. (SZSE:002706) Than They Used To Be

One thing we could say about the analysts on Shanghai Liangxin Electrical Co.,LTD. (SZSE:002706) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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.

After the downgrade, the eight analysts covering Shanghai Liangxin ElectricalLTD are now predicting revenues of CN¥4.8b in 2024. If met, this would reflect a solid 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 4.7% to CN¥0.44. Previously, the analysts had been modelling revenues of CN¥5.6b and earnings per share (EPS) of CN¥0.56 in 2024. Indeed, we can see that the analysts are a lot more bearish about Shanghai Liangxin ElectricalLTD's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Shanghai Liangxin ElectricalLTD

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shanghai Liangxin ElectricalLTD's past performance and to peers in the same industry. It's clear from the latest estimates that Shanghai Liangxin ElectricalLTD's rate of growth is expected to accelerate meaningfully, with the forecast 24% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 18% p.a. 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 16% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Shanghai Liangxin ElectricalLTD is expected to grow much faster than its 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 Shanghai Liangxin ElectricalLTD. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Shanghai Liangxin ElectricalLTD, and we wouldn't blame shareholders for feeling a little more cautious themselves.

In light of the downgrade, our automated discounted cash flow valuation tool suggests that Shanghai Liangxin ElectricalLTD could now be moderately overvalued. Find out why, and see how we estimate the valuation for 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.