Guangzhou Restaurant Group Company Limited (SHSE:603043) Just Reported First-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?

The quarterly results for Guangzhou Restaurant Group Company Limited (SHSE:603043) were released last week, making it a good time to revisit its performance. Results were roughly in line with estimates, with revenues of CN¥1.0b and statutory earnings per share of CN¥0.97. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Guangzhou Restaurant Group after the latest results.

View our latest analysis for Guangzhou Restaurant Group

Following the latest results, Guangzhou Restaurant Group's nine analysts are now forecasting revenues of CN¥5.49b in 2024. This would be a meaningful 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to expand 18% to CN¥1.14. In the lead-up to this report, the analysts had been modelling revenues of CN¥5.52b and earnings per share (EPS) of CN¥1.11 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at CN¥22.65, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Guangzhou Restaurant Group at CN¥23.00 per share, while the most bearish prices it at CN¥22.00. This is a very narrow spread of estimates, implying either that Guangzhou Restaurant Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 14% growth on an annualised basis. That is in line with its 12% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 15% per year. It's clear that while Guangzhou Restaurant Group's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Guangzhou Restaurant Group's earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at CN¥22.65, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Guangzhou Restaurant Group analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Guangzhou Restaurant Group that you should be aware of.

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.