Chongqing Fuling Zhacai Group Co., Ltd. (SZSE:002507) Just Reported Earnings, And Analysts Cut Their Target Price

The full-year results for Chongqing Fuling Zhacai Group Co., Ltd. (SZSE:002507) were released last week, making it a good time to revisit its performance. Revenues came in 2.5% below expectations, at CN¥2.4b. Statutory earnings per share were relatively better off, with a per-share profit of CN¥0.72 being roughly in line with analyst estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Chongqing Fuling Zhacai Group

Taking into account the latest results, the consensus forecast from Chongqing Fuling Zhacai Group's 14 analysts is for revenues of CN¥2.69b in 2024. This reflects a notable 9.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to step up 11% to CN¥0.80. Before this earnings report, the analysts had been forecasting revenues of CN¥2.78b and earnings per share (EPS) of CN¥0.82 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

The consensus price target fell 6.1% to CN¥16.30, 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 Chongqing Fuling Zhacai Group, with the most bullish analyst valuing it at CN¥20.00 and the most bearish at CN¥11.50 per share. 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.

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 clear from the latest estimates that Chongqing Fuling Zhacai Group's rate of growth is expected to accelerate meaningfully, with the forecast 9.9% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.5% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 13% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Chongqing Fuling Zhacai Group is expected to grow slower than the wider industry.

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. 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. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 forecasts for Chongqing Fuling Zhacai Group going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for Chongqing Fuling Zhacai Group (1 is potentially serious!) that we have uncovered.

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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.