Anhui Honglu Steel Construction(Group) CO., LTD Just Missed Earnings - But Analysts Have Updated Their Models

Investors in Anhui Honglu Steel Construction(Group) CO., LTD (SZSE:002541) had a good week, as its shares rose 5.2% to close at CN¥16.45 following the release of its annual results. Revenues were in line with forecasts, at CN¥24b, although statutory earnings per share came in 13% below what the analysts expected, at CN¥1.67 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Anhui Honglu Steel Construction(Group)

Taking into account the latest results, the consensus forecast from Anhui Honglu Steel Construction(Group)'s twelve analysts is for revenues of CN¥27.1b in 2024. This reflects a solid 15% improvement in revenue compared to the last 12 months. Per-share earnings are expected to grow 14% to CN¥1.95. In the lead-up to this report, the analysts had been modelling revenues of CN¥27.6b and earnings per share (EPS) of CN¥2.30 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

The average price target fell 15% to CN¥28.13, with reduced earnings forecasts clearly tied to a lower valuation estimate. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Anhui Honglu Steel Construction(Group) at CN¥42.46 per share, while the most bearish prices it at CN¥19.32. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Anhui Honglu Steel Construction(Group)'s revenue growth is expected to slow, with the forecast 15% annualised growth rate until the end of 2024 being well below the historical 21% 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) 10% per year. Even after the forecast slowdown in growth, it seems obvious that Anhui Honglu Steel Construction(Group) is also expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Anhui Honglu Steel Construction(Group). Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Anhui Honglu Steel Construction(Group). Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Anhui Honglu Steel Construction(Group) analysts - going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with Anhui Honglu Steel Construction(Group) (including 1 which is a bit concerning) .

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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.