Downgrade: Here's How Analysts See Xinxing Ductile Iron Pipes Co., Ltd. (SZSE:000778) Performing In The Near Term

Today is shaping up negative for Xinxing Ductile Iron Pipes Co., Ltd. (SZSE:000778) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, Xinxing Ductile Iron Pipes' four analysts currently expect revenues in 2024 to be CN¥43b, approximately in line with the last 12 months. Per-share earnings are expected to rise 3.3% to CN¥0.35. Previously, the analysts had been modelling revenues of CN¥51b and earnings per share (EPS) of CN¥0.49 in 2024. Indeed, we can see that the analysts are a lot more bearish about Xinxing Ductile Iron Pipes' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Xinxing Ductile Iron Pipes

The average price target climbed 10% to CN¥4.60 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Xinxing Ductile Iron Pipes' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 1.1% by the end of 2024. This indicates a significant reduction from annual growth of 3.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 10.0% annually for the foreseeable future. It's pretty clear that Xinxing Ductile Iron Pipes' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Xinxing Ductile Iron Pipes' revenues are expected to grow slower than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Xinxing Ductile Iron Pipes going out to 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.