Earnings Update: Here's Why Analysts Just Lifted Their Guangdong Xinbao Electrical Appliances Holdings Co., Ltd (SZSE:002705) Price Target To CN¥21.19

Guangdong Xinbao Electrical Appliances Holdings Co., Ltd (SZSE:002705) shareholders are probably feeling a little disappointed, since its shares fell 6.4% to CN¥16.62 in the week after its latest quarterly results. Guangdong Xinbao Electrical Appliances Holdings beat revenue expectations by 3.3%, at CN¥3.5b. Statutory earnings per share (EPS) came in at CN¥0.21, some 4.1% short of analyst estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Guangdong Xinbao Electrical Appliances Holdings

Following the latest results, Guangdong Xinbao Electrical Appliances Holdings' eleven analysts are now forecasting revenues of CN¥16.5b in 2024. This would be a credible 7.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to grow 16% to CN¥1.43. In the lead-up to this report, the analysts had been modelling revenues of CN¥15.7b and earnings per share (EPS) of CN¥1.35 in 2024. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 6.4% to CN¥21.19per share. 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 Guangdong Xinbao Electrical Appliances Holdings at CN¥25.00 per share, while the most bearish prices it at CN¥14.40. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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 can infer from the latest estimates that forecasts expect a continuation of Guangdong Xinbao Electrical Appliances Holdings'historical trends, as the 11% annualised revenue growth to the end of 2024 is roughly in line with the 10% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 9.6% annually. So although Guangdong Xinbao Electrical Appliances Holdings is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Guangdong Xinbao Electrical Appliances Holdings' earnings potential next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Guangdong Xinbao Electrical Appliances Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Guangdong Xinbao Electrical Appliances Holdings analysts - going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Guangdong Xinbao Electrical Appliances Holdings that we have uncovered.

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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.