ShanDongDenghai Seeds Co.,Ltd Just Beat Revenue By 12%: Here's What Analysts Think Will Happen Next

Investors in ShanDongDenghai Seeds Co.,Ltd (SZSE:002041) had a good week, as its shares rose 6.7% to close at CN¥8.13 following the release of its half-year results. ShanDongDenghai SeedsLtd beat revenue forecasts by a solid 12% to hit CN¥408m. Statutory earnings per share came in at CN¥0.29, in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for ShanDongDenghai SeedsLtd

Following last week's earnings report, ShanDongDenghai SeedsLtd's five analysts are forecasting 2024 revenues to be CN¥1.48b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be CN¥0.27, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of CN¥1.69b and earnings per share (EPS) of CN¥0.33 in 2024. Indeed, we can see that the analysts are a lot more bearish about ShanDongDenghai SeedsLtd's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 21% to CN¥9.51, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on ShanDongDenghai SeedsLtd, with the most bullish analyst valuing it at CN¥11.00 and the most bearish at CN¥9.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that ShanDongDenghai SeedsLtd's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.3% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple ShanDongDenghai SeedsLtd analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 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.