Inner Mongolia Yili Industrial Group Co., Ltd. Just Missed EPS By 22%: Here's What Analysts Think Will Happen Next

Inner Mongolia Yili Industrial Group Co., Ltd. (SHSE:600887) just released its latest interim report and things are not looking great. Results showed a clear earnings miss, with CN¥60b revenue coming in 5.7% lower than what the analystsexpected. Statutory earnings per share (EPS) of CN¥0.26 missed the mark badly, arriving some 22% below what was expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Inner Mongolia Yili Industrial Group after the latest results.

View our latest analysis for Inner Mongolia Yili Industrial Group

Following the latest results, Inner Mongolia Yili Industrial Group's 28 analysts are now forecasting revenues of CN¥123.3b in 2024. This would be a credible 2.8% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be CN¥1.85, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of CN¥128.4b and earnings per share (EPS) of CN¥1.99 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

It'll come as no surprise then, to learn that the analysts have cut their price target 9.2% to CN¥30.06. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Inner Mongolia Yili Industrial Group, with the most bullish analyst valuing it at CN¥35.60 and the most bearish at CN¥24.50 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Inner Mongolia Yili Industrial Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.8% growth on an annualised basis. This is compared to a historical growth rate of 8.5% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Inner Mongolia Yili Industrial Group.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Inner Mongolia Yili Industrial Group's future valuation.

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 Inner Mongolia Yili Industrial Group analysts - going out to 2026, and you can see them free on our platform here.

It might also be worth considering whether Inner Mongolia Yili Industrial Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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.