Analysts Just Shaved Their New Hope Liuhe Co.,Ltd. (SZSE:000876) Forecasts Dramatically

Today is shaping up negative for New Hope Liuhe Co.,Ltd. (SZSE:000876) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the consensus from five analysts covering New Hope LiuheLtd is for revenues of CN¥125b in 2024, implying a small 5.0% decline in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 27,474% to CN¥0.032. Before this latest update, the analysts had been forecasting revenues of CN¥154b and earnings per share (EPS) of CN¥0.43 in 2024. Indeed, we can see that the analysts are a lot more bearish about New Hope LiuheLtd's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for New Hope LiuheLtd

Despite the cuts to forecast earnings, there was no real change to the CN¥10.29 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the New Hope LiuheLtd's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 5.0% by the end of 2024. This indicates a significant reduction from annual growth of 14% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.2% annually for the foreseeable future. It's pretty clear that New Hope LiuheLtd's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for New Hope LiuheLtd. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on New Hope LiuheLtd after the downgrade.

Unfortunately, the earnings downgrade - if accurate - may also place pressure on New Hope LiuheLtd's mountain of debt, which could lead to some belt tightening for shareholders. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.

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

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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.