Some Analysts Just Cut Their Shandong Minhe Animal Husbandry Co., Ltd. (SZSE:002234) Estimates

The latest analyst coverage could presage a bad day for Shandong Minhe Animal Husbandry Co., Ltd. (SZSE:002234), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the current consensus from Shandong Minhe Animal Husbandry's dual analysts is for revenues of CN¥2.2b in 2024 which - if met - would reflect a decent 10% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 32% to CN¥1.04. Prior to this update, the analysts had been forecasting revenues of CN¥3.0b and earnings per share (EPS) of CN¥0.59 in 2024. So we can see that the consensus has become notably more bearish on Shandong Minhe Animal Husbandry's outlook with these numbers, making a sizeable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

View our latest analysis for Shandong Minhe Animal Husbandry

The consensus price target fell 33% to CN¥8.26, implicitly signalling that lower earnings per share are a leading indicator for Shandong Minhe Animal Husbandry's valuation.

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. For example, we noticed that Shandong Minhe Animal Husbandry's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 10% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 9.6% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 11% annually. So it looks like Shandong Minhe Animal Husbandry is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Shandong Minhe Animal Husbandry dropped from profits to a loss this year. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Shandong Minhe Animal Husbandry going forwards.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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