Earnings Report: Zhongfu Shenying Carbon Fiber Co.,Ltd. Missed Revenue Estimates By 6.3%

It's been a good week for Zhongfu Shenying Carbon Fiber Co.,Ltd. (SHSE:688295) shareholders, because the company has just released its latest first-quarter results, and the shares gained 4.0% to CN¥17.55. Revenues came in 6.3% below expectations, at CN¥447m. Statutory earnings per share were relatively better off, with a per-share profit of CN¥0.35 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Zhongfu Shenying Carbon FiberLtd

After the latest results, the eight analysts covering Zhongfu Shenying Carbon FiberLtd are now predicting revenues of CN¥2.03b in 2024. If met, this would reflect a satisfactory 4.8% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 26% to CN¥0.17. In the lead-up to this report, the analysts had been modelling revenues of CN¥2.55b and earnings per share (EPS) of CN¥0.34 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a large cut to revenue estimates and a pretty serious reduction to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 12% to CN¥32.81. 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 Zhongfu Shenying Carbon FiberLtd analyst has a price target of CN¥41.00 per share, while the most pessimistic values it at CN¥21.35. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that Zhongfu Shenying Carbon FiberLtd is forecast to grow faster in the future than it has in the past, with revenues expected to display 6.5% annualised growth until the end of 2024. If achieved, this would be a much better result than the 12% annual decline over the past year. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 15% annually for the foreseeable future. So although Zhongfu Shenying Carbon FiberLtd's revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Zhongfu Shenying Carbon FiberLtd. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Zhongfu Shenying Carbon FiberLtd's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Zhongfu Shenying Carbon FiberLtd. 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 Zhongfu Shenying Carbon FiberLtd going out to 2026, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Zhongfu Shenying Carbon FiberLtd , and understanding them should be part of your investment process.

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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.