Analysts Have Just Cut Their Shanghai Liangxin Electrical Co.,LTD. (SZSE:002706) Revenue Estimates By 10%

The analysts covering Shanghai Liangxin Electrical Co.,LTD. (SZSE:002706) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the most recent consensus for Shanghai Liangxin ElectricalLTD from its eight analysts is for revenues of CN¥5.5b in 2024 which, if met, would be a meaningful 19% increase on its sales over the past 12 months. Statutory earnings per share are presumed to step up 20% to CN¥0.54. Prior to this update, the analysts had been forecasting revenues of CN¥6.1b and earnings per share (EPS) of CN¥0.59 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a small dip in earnings per share numbers as well.

See our latest analysis for Shanghai Liangxin ElectricalLTD

The consensus price target fell 25% to CN¥9.79, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. We can infer from the latest estimates that forecasts expect a continuation of Shanghai Liangxin ElectricalLTD'shistorical trends, as the 19% annualised revenue growth to the end of 2024 is roughly in line with the 21% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 18% annually. So although Shanghai Liangxin ElectricalLTD is expected to maintain its revenue growth rate, it's only growing at about the rate of 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. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Shanghai Liangxin ElectricalLTD going forwards.

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 Shanghai Liangxin ElectricalLTD 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 that insiders are buying.

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.