China Northern Rare Earth (Group) High-Tech Co.,Ltd Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

It's shaping up to be a tough period for China Northern Rare Earth (Group) High-Tech Co.,Ltd (SHSE:600111), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥5.8b missed by 18%, and statutory earnings per share of CN¥0.014 fell short of forecasts by 91%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for China Northern Rare Earth (Group) High-TechLtd

Taking into account the latest results, the most recent consensus for China Northern Rare Earth (Group) High-TechLtd from four analysts is for revenues of CN¥32.3b in 2024. If met, it would imply an okay 7.6% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to bounce 64% to CN¥0.62. In the lead-up to this report, the analysts had been modelling revenues of CN¥32.6b and earnings per share (EPS) of CN¥0.66 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at CN¥22.26, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic China Northern Rare Earth (Group) High-TechLtd analyst has a price target of CN¥26.00 per share, while the most pessimistic values it at CN¥17.74. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. We would highlight that China Northern Rare Earth (Group) High-TechLtd's revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2024 being well below the historical 14% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.6% annually. Factoring in the forecast slowdown in growth, it looks like China Northern Rare Earth (Group) High-TechLtd is forecast to grow at about the same rate as 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. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at CN¥22.26, 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 China Northern Rare Earth (Group) High-TechLtd. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple China Northern Rare Earth (Group) High-TechLtd analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for China Northern Rare Earth (Group) High-TechLtd 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.