Earnings Report: Shanghai Liangxin Electrical Co.,LTD. Missed Revenue Estimates By 7.1%

The analysts might have been a bit too bullish on Shanghai Liangxin Electrical Co.,LTD. (SZSE:002706), given that the company fell short of expectations when it released its full-year results last week. Shanghai Liangxin ElectricalLTD missed analyst forecasts, with revenues of CN¥4.6b and statutory earnings per share (EPS) of CN¥0.45, falling short by 7.1% and 5.4% respectively. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Shanghai Liangxin ElectricalLTD

After the latest results, the eight analysts covering Shanghai Liangxin ElectricalLTD are now predicting revenues of CN¥5.47b in 2024. If met, this would reflect a meaningful 19% improvement in revenue compared to the last 12 months. Per-share earnings are expected to swell 20% to CN¥0.54. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥6.07b and earnings per share (EPS) of CN¥0.59 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

The consensus price target fell 19% to CN¥10.59, with the weaker earnings outlook clearly leading valuation estimates. 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. The most optimistic Shanghai Liangxin ElectricalLTD analyst has a price target of CN¥15.00 per share, while the most pessimistic values it at CN¥7.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. 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 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 biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shanghai Liangxin ElectricalLTD. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 forecasts for Shanghai Liangxin ElectricalLTD going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Shanghai Liangxin ElectricalLTD that you need to take into consideration.

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.