The Consensus EPS Estimates For Zhejiang Meida Industrial Co., Ltd. (SZSE:002677) Just Fell Dramatically

Market forces rained on the parade of Zhejiang Meida Industrial Co., Ltd. (SZSE:002677) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the six analysts covering Zhejiang Meida Industrial, is for revenues of CN¥996m in 2024, which would reflect a substantial 27% reduction in Zhejiang Meida Industrial's sales over the past 12 months. Statutory earnings per share are supposed to tumble 23% to CN¥0.41 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¥0.69 in 2024. Indeed, we can see that the analysts are a lot more bearish about Zhejiang Meida Industrial's prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Zhejiang Meida Industrial

Analysts made no major changes to their price target of CN¥9.22, suggesting the downgrades are not expected to have a long-term impact on Zhejiang Meida Industrial's valuation.

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. We would highlight that sales are expected to reverse, with a forecast 46% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 0.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 8.2% annually for the foreseeable future. It's pretty clear that Zhejiang Meida Industrial's revenues are expected to perform substantially worse than the wider 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. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Zhejiang Meida Industrial after the downgrade.

Not only have the analysts been downgrading the stock, but it looks like Zhejiang Meida Industrial might find it hard to maintain its dividends, if these forecasts prove accurate. What makes us say that? Learn more by visiting our risks dashboard 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 backed by insiders.

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.