Analysts Just Made A Major Revision To Their Guanghui Energy Co., Ltd. (SHSE:600256) Revenue Forecasts

The analysts covering Guanghui Energy Co., Ltd. (SHSE:600256) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the current consensus from Guanghui Energy's four analysts is for revenues of CN¥55b in 2024 which - if met - would reflect a substantial 26% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 117% to CN¥0.84. Prior to this update, the analysts had been forecasting revenues of CN¥63b and earnings per share (EPS) of CN¥0.85 in 2024. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a measurable cut to revenues and some minor tweaks to earnings numbers.

See our latest analysis for Guanghui Energy

The consensus price target rose 7.4% to CN¥9.02, with the analysts apparently satisfied with the business performance despite lower revenue forecasts.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Guanghui Energy's revenue growth is expected to slow, with the forecast 26% annualised growth rate until the end of 2024 being well below the historical 36% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.8% per year. So it's pretty clear that, while Guanghui Energy's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given the stark change in sentiment, we'd understand if investors became more cautious on Guanghui Energy after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Guanghui Energy's business, like its declining profit margins. Learn more, and discover the 3 other flags we've identified, for free on our platform here.

You can also see our analysis of Guanghui Energy's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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.