Results: Ligao Foods Co.,Ltd. Beat Earnings Expectations And Analysts Now Have New Forecasts

Shareholders of Ligao Foods Co.,Ltd. (SZSE:300973) will be pleased this week, given that the stock price is up 14% to CN¥35.82 following its latest first-quarter results. Revenues CN¥916m disappointed slightly, at2.7% below what the analysts had predicted. Profits were a relative bright spot, with statutory per-share earnings of CN¥0.42 coming in 11% above what was anticipated. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Ligao FoodsLtd after the latest results.

See our latest analysis for Ligao FoodsLtd

Taking into account the latest results, the consensus forecast from Ligao FoodsLtd's twelve analysts is for revenues of CN¥4.11b in 2024. This reflects a notable 13% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 187% to CN¥1.69. Before this earnings report, the analysts had been forecasting revenues of CN¥4.45b and earnings per share (EPS) of CN¥2.00 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the CN¥47.42 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. There are some variant perceptions on Ligao FoodsLtd, with the most bullish analyst valuing it at CN¥70.00 and the most bearish at CN¥32.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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 clear from the latest estimates that Ligao FoodsLtd's rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 15% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Ligao FoodsLtd to grow faster 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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Ligao FoodsLtd. Long-term earnings power is much more important than next year's profits. We have forecasts for Ligao FoodsLtd 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 2 warning signs for Ligao FoodsLtd (1 is potentially serious) 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.