ShanDongDenghai Seeds Co.,Ltd Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Investors in ShanDongDenghai Seeds Co.,Ltd (SZSE:002041) had a good week, as its shares rose 4.3% to close at CN¥9.60 following the release of its annual results. Revenues of CN¥1.6b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at CN¥0.29, missing estimates by 9.9%. 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 ShanDongDenghai SeedsLtd after the latest results.

Check out our latest analysis for ShanDongDenghai SeedsLtd

Taking into account the latest results, the consensus forecast from ShanDongDenghai SeedsLtd's nine analysts is for revenues of CN¥1.62b in 2024. This reflects an okay 4.1% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 41% to CN¥0.41. In the lead-up to this report, the analysts had been modelling revenues of CN¥1.85b and earnings per share (EPS) of CN¥0.42 in 2024. It looks like sentiment has fallen somewhat in the aftermath of these results, with a substantial drop in revenue estimates and a minor downgrade to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 16% to CN¥13.39. 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. The most optimistic ShanDongDenghai SeedsLtd analyst has a price target of CN¥18.00 per share, while the most pessimistic values it at CN¥10.54. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that ShanDongDenghai SeedsLtd's revenue growth is expected to slow, with the forecast 4.1% annualised growth rate until the end of 2024 being well below the historical 14% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% 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 ShanDongDenghai SeedsLtd.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ShanDongDenghai SeedsLtd. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of ShanDongDenghai SeedsLtd'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 ShanDongDenghai SeedsLtd analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for ShanDongDenghai SeedsLtd that you should be aware of.

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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.