Jizhong Energy Resources Co., Ltd. (SZSE:000937) Analysts Are More Bearish Than They Used To Be

Market forces rained on the parade of Jizhong Energy Resources Co., Ltd. (SZSE:000937) shareholders today, when the analysts downgraded their 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. Shares are up 7.3% to CN¥8.36 in the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the latest consensus from Jizhong Energy Resources' dual analysts is for revenues of CN¥30b in 2024, which would reflect a major 23% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to accumulate 5.3% to CN¥1.03. Previously, the analysts had been modelling revenues of CN¥37b and earnings per share (EPS) of CN¥1.38 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for Jizhong Energy Resources

What's most unexpected is that the consensus price target rose 11% to CN¥10.00, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

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. It's clear from the latest estimates that Jizhong Energy Resources' rate of growth is expected to accelerate meaningfully, with the forecast 23% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 10% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Jizhong Energy Resources is expected to grow much faster than its 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Jizhong Energy Resources going out as far as 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.