Earnings Miss: Ganfeng Lithium Group Co., Ltd. Missed EPS By 26% And Analysts Are Revising Their Forecasts

It's shaping up to be a tough period for Ganfeng Lithium Group Co., Ltd. (SZSE:002460), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥33b, statutory earnings missed forecasts by an incredible 26%, coming in at just CN¥2.46 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Ganfeng Lithium Group

Following last week's earnings report, Ganfeng Lithium Group's 17 analysts are forecasting 2024 revenues to be CN¥33.3b, approximately in line with the last 12 months. Per-share earnings are expected to soar 25% to CN¥3.08. In the lead-up to this report, the analysts had been modelling revenues of CN¥35.5b and earnings per share (EPS) of CN¥3.33 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the CN¥44.52 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. Currently, the most bullish analyst values Ganfeng Lithium Group at CN¥62.00 per share, while the most bearish prices it at CN¥23.00. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Ganfeng Lithium Group's revenue growth is expected to slow, with the forecast 1.0% annualised growth rate until the end of 2024 being well below the historical 51% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 17% annually. Factoring in the forecast slowdown in growth, it seems obvious that Ganfeng Lithium Group is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Ganfeng Lithium Group. 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 held steady at CN¥44.52, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Ganfeng Lithium Group going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Ganfeng Lithium Group (including 1 which shouldn't be ignored) .

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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.