Earnings Miss: Shanghai Liangxin Electrical Co.,LTD. Missed EPS By 32% And Analysts Are Revising Their Forecasts

Shanghai Liangxin Electrical Co.,LTD. (SZSE:002706) just released its latest annual report and things are not looking great. Results showed a clear earnings miss, with CN¥4.2b revenue coming in 6.3% lower than what the analystsexpected. Statutory earnings per share (EPS) of CN¥0.28 missed the mark badly, arriving some 32% below what was expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Shanghai Liangxin ElectricalLTD after the latest results.

Following the latest results, Shanghai Liangxin ElectricalLTD's six analysts are now forecasting revenues of CN¥5.10b in 2025. This would be a substantial 20% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 39% to CN¥0.39. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥5.25b and earnings per share (EPS) of CN¥0.48 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

Check out our latest analysis for Shanghai Liangxin ElectricalLTD

The average price target climbed 12% to CN¥8.05despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Shanghai Liangxin ElectricalLTD, with the most bullish analyst valuing it at CN¥9.10 and the most bearish at CN¥6.85 per share. This is a very narrow spread of estimates, implying either that Shanghai Liangxin ElectricalLTD is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Shanghai Liangxin ElectricalLTD's growth to accelerate, with the forecast 20% annualised growth to the end of 2025 ranking favourably alongside historical growth of 13% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 17% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Shanghai Liangxin ElectricalLTD is expected to grow at about the same rate as the wider industry.

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. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Shanghai Liangxin ElectricalLTD. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Shanghai Liangxin ElectricalLTD analysts - going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Shanghai Liangxin ElectricalLTD that you need to take into consideration.

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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.