Bearish: Analysts Just Cut Their Guangdong Deerma Technology Co., Ltd. (SZSE:301332) Revenue and EPS estimates

The analysts covering Guangdong Deerma Technology Co., Ltd. (SZSE:301332) 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) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the four analysts covering Guangdong Deerma Technology are now predicting revenues of CN¥3.5b in 2024. If met, this would reflect a modest 5.9% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 21% to CN¥0.49. Prior to this update, the analysts had been forecasting revenues of CN¥4.0b and earnings per share (EPS) of CN¥0.55 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.

See our latest analysis for Guangdong Deerma Technology

The consensus price target fell 14% to CN¥12.46, with the weaker earnings outlook clearly leading analyst valuation estimates.

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 would highlight that Guangdong Deerma Technology's revenue growth is expected to slow, with the forecast 5.9% annualised growth rate until the end of 2024 being well below the historical 19% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.3% per year. Factoring in the forecast slowdown in growth, it seems obvious that Guangdong Deerma Technology is also expected to grow slower than other industry participants.

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 Guangdong Deerma Technology.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Guangdong Deerma Technology analysts - going out to 2025, and you can see them free on our platform here.

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 that insiders are buying.

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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.