Things Look Grim For Guangzhou Shangpin Home Collection Co., Ltd. (SZSE:300616) After Today's Downgrade

Market forces rained on the parade of Guangzhou Shangpin Home Collection Co., Ltd. (SZSE:300616) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the latest downgrade, the three analysts covering Guangzhou Shangpin Home Collection provided consensus estimates of CN¥4.3b revenue in 2024, which would reflect a small 6.3% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to crater 90% to CN¥0.01 in the same period. Before this latest update, the analysts had been forecasting revenues of CN¥4.8b and earnings per share (EPS) of CN¥0.46 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

View our latest analysis for Guangzhou Shangpin Home Collection

Analysts made no major changes to their price target of CN¥9.30, suggesting the downgrades are not expected to have a long-term impact on Guangzhou Shangpin Home Collection'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. Over the past five years, revenues have declined around 8.4% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 12% decline in revenue until the end of 2024. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 8.2% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Guangzhou Shangpin Home Collection to suffer 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. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Guangzhou Shangpin Home Collection's revenues are expected to grow slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Guangzhou Shangpin Home Collection.

There might be good reason for analyst bearishness towards Guangzhou Shangpin Home Collection, like its declining profit margins. For more information, you can click here to discover this and the 3 other flags we've identified.

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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.