CN¥8.85: That's What Analysts Think Zhejiang Xinao Textiles Inc. (SHSE:603889) Is Worth After Its Latest Results

It's been a good week for Zhejiang Xinao Textiles Inc. (SHSE:603889) shareholders, because the company has just released its latest annual results, and the shares gained 4.5% to CN¥7.26. It looks like the results were a bit of a negative overall. While revenues of CN¥4.4b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.8% to hit CN¥0.56 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Zhejiang Xinao Textiles

Taking into account the latest results, the consensus forecast from Zhejiang Xinao Textiles' five analysts is for revenues of CN¥5.09b in 2024. This reflects a decent 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to ascend 17% to CN¥0.65. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥5.04b and earnings per share (EPS) of CN¥0.70 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The average price target fell 12% to CN¥8.85, with reduced earnings forecasts clearly tied to a lower valuation estimate. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Zhejiang Xinao Textiles at CN¥9.00 per share, while the most bearish prices it at CN¥8.70. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Zhejiang Xinao Textiles is an easy business to forecast or the the analysts are all using similar 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. We can infer from the latest estimates that forecasts expect a continuation of Zhejiang Xinao Textiles'historical trends, as the 15% annualised revenue growth to the end of 2024 is roughly in line with the 13% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 15% per year. It's clear that while Zhejiang Xinao Textiles' revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

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 reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Zhejiang Xinao Textiles 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 Zhejiang Xinao Textiles 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.