Need To Know: Analysts Just Made A Substantial Cut To Their Guangdong Tapai Group Co., Ltd. (SZSE:002233) Estimates

Market forces rained on the parade of Guangdong Tapai Group Co., Ltd. (SZSE:002233) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. At CN¥7.68, shares are up 4.6% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

After this downgrade, Guangdong Tapai Group's three analysts are now forecasting revenues of CN¥5.7b in 2024. This would be an okay 3.4% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to increase 8.1% to CN¥0.71. Previously, the analysts had been modelling revenues of CN¥6.7b and earnings per share (EPS) of CN¥0.80 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

See our latest analysis for Guangdong Tapai Group

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Guangdong Tapai Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 3.4% annualised growth until the end of 2024. If achieved, this would be a much better result than the 1.9% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 11% per year. Although Guangdong Tapai Group's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader 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 Guangdong Tapai Group's revenues are expected to grow slower than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Guangdong Tapai Group, and a few readers might choose to steer clear of the stock.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Guangdong Tapai Group analysts - 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.