Bearish: Analysts Just Cut Their Shuhua Sports Co., Ltd. (SHSE:605299) Revenue and EPS estimates

The analysts covering Shuhua Sports Co., Ltd. (SHSE:605299) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After this downgrade, Shuhua Sports' two analysts are now forecasting revenues of CN¥1.4b in 2024. This would be an okay 3.4% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to decrease 4.6% to CN¥0.29 in the same period. Before this latest update, the analysts had been forecasting revenues of CN¥1.6b and earnings per share (EPS) of CN¥0.35 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

See our latest analysis for Shuhua Sports

The consensus price target fell 33% to CN¥8.75, with the weaker earnings outlook clearly leading analyst valuation estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Shuhua Sports' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 3.4% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 4.8% a year over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 15% per year. So although Shuhua Sports' revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales 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 Shuhua Sports.

Not only have the analysts been downgrading the stock, but it looks like Shuhua Sports might find it hard to maintain its dividends, if these forecasts prove accurate. For more information, you can click here to learn more about our dividend analysis and the 1 potential flag we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.