Analysts Are More Bearish On Wangneng Environment Co.,Ltd (SZSE:002034) Than They Used To Be

The analysts covering Wangneng Environment Co.,Ltd (SZSE:002034) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. Shares are up 4.9% to CN¥14.42 in the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After this downgrade, Wangneng EnvironmentLtd's four analysts are now forecasting revenues of CN¥3.3b in 2024. This would be a satisfactory 6.5% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to step up 15% to CN¥1.66. Previously, the analysts had been modelling revenues of CN¥4.4b and earnings per share (EPS) of CN¥2.21 in 2024. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.

Check out our latest analysis for Wangneng EnvironmentLtd

It'll come as no surprise then, to learn that the analysts have cut their price target 15% to CN¥17.65.

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. We would highlight that Wangneng EnvironmentLtd's revenue growth is expected to slow, with the forecast 8.7% annualised growth rate until the end of 2024 being well below the historical 25% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 20% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Wangneng EnvironmentLtd.

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 Wangneng EnvironmentLtd. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Wangneng EnvironmentLtd's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Wangneng EnvironmentLtd.

Unfortunately, the earnings downgrade - if accurate - may also place pressure on Wangneng EnvironmentLtd's mountain of debt, which could lead to some belt tightening for shareholders. See why we're concerned about Wangneng EnvironmentLtd's balance sheet by visiting our risks dashboard for free on our platform here.

You can also see our analysis of Wangneng EnvironmentLtd's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.