Things Look Grim For Shenzhen Ridge Engineering Consulting Co., Ltd. (SZSE:300977) After Today's Downgrade

Market forces rained on the parade of Shenzhen Ridge Engineering Consulting Co., Ltd. (SZSE:300977) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the most recent consensus for Shenzhen Ridge Engineering Consulting from its dual analysts is for revenues of CN¥568m in 2024 which, if met, would be a solid 13% increase on its sales over the past 12 months. Per-share earnings are expected to leap 60% to CN¥0.46. Prior to this update, the analysts had been forecasting revenues of CN¥814m and earnings per share (EPS) of CN¥0.73 in 2024. Indeed, we can see that the analysts are a lot more bearish about Shenzhen Ridge Engineering Consulting's prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Shenzhen Ridge Engineering Consulting

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. It's clear from the latest estimates that Shenzhen Ridge Engineering Consulting's rate of growth is expected to accelerate meaningfully, with the forecast 13% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 7.6% 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 10% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shenzhen Ridge Engineering Consulting to grow faster than the wider 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 Shenzhen Ridge Engineering Consulting. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Shenzhen Ridge Engineering Consulting, and a few readers might choose to steer clear of the stock.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Shenzhen Ridge Engineering Consulting going out as far as 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.