China Design Group Co., Ltd. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

The analysts might have been a bit too bullish on China Design Group Co., Ltd. (SHSE:603018), given that the company fell short of expectations when it released its quarterly results last week. China Design Group delivered a grave earnings miss, with both revenues (CN¥871m) and statutory earnings per share (CN¥0.08) falling badly short of analyst expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for China Design Group

After the latest results, the consensus from China Design Group's seven analysts is for revenues of CN¥4.27b in 2024, which would reflect an uneasy 11% decline in revenue compared to the last year of performance. Statutory earnings per share are expected to drop 19% to CN¥0.71 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CN¥5.62b and earnings per share (EPS) of CN¥1.12 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.2% to CN¥10.43. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values China Design Group at CN¥13.56 per share, while the most bearish prices it at CN¥8.90. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 20% by the end of 2024. This indicates a significant reduction from annual growth of 4.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 21% per year. It's pretty clear that China Design Group's revenues are expected to perform substantially worse than 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 China Design Group. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of China Design Group's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on China Design Group. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for China Design Group going out to 2026, and you can see them free on our platform here..

Plus, you should also learn about the 1 warning sign we've spotted with China Design Group .

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.