Revenue Beat: Chacha Food Company, Limited Exceeded Revenue Forecasts By 12% And Analysts Are Updating Their Estimates

Chacha Food Company, Limited (SZSE:002557) just released its latest quarterly results and things are looking bullish. Chacha Food Company beat expectations, with revenue hitting CN¥1.8b (12% ahead of estimates) and EPS reaching CN¥0.47 (a 8.0% beat). 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Chacha Food Company

Taking into account the latest results, the consensus forecast from Chacha Food Company's 16 analysts is for revenues of CN¥7.71b in 2024. This reflects a credible 5.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 26% to CN¥2.15. Before this earnings report, the analysts had been forecasting revenues of CN¥7.71b and earnings per share (EPS) of CN¥2.09 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of CN¥43.36, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Chacha Food Company, with the most bullish analyst valuing it at CN¥51.00 and the most bearish at CN¥33.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Chacha Food Company shareholders.

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. It's pretty clear that there is an expectation that Chacha Food Company's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.7% growth on an annualised basis. This is compared to a historical growth rate of 10% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.2% annually. So it's pretty clear that, while Chacha Food Company's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Chacha Food Company's earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at CN¥43.36, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Chacha Food Company. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Chacha Food Company 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 Chacha Food Company 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.