Analysts Are More Bearish On Shandong Head Group Co.,Ltd. (SZSE:002810) Than They Used To Be

The latest analyst coverage could presage a bad day for Shandong Head Group Co.,Ltd. (SZSE:002810), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. The stock price has risen 5.8% to CN¥11.66 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the most recent consensus for Shandong Head GroupLtd from its three analysts is for revenues of CN¥2.1b in 2024 which, if met, would be a solid 18% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 56% to CN¥0.86. Before this latest update, the analysts had been forecasting revenues of CN¥2.3b and earnings per share (EPS) of CN¥1.03 in 2024. Indeed, we can see that the analysts are a lot more bearish about Shandong Head GroupLtd's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Shandong Head GroupLtd

The consensus price target fell 13% to CN¥17.00, with the weaker earnings outlook clearly leading analyst valuation estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shandong Head GroupLtd's past performance and to peers in the same industry. It's clear from the latest estimates that Shandong Head GroupLtd's rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 9.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Shandong Head GroupLtd is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Shandong Head GroupLtd. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Shandong Head GroupLtd.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Shandong Head GroupLtd analysts - going out to 2026, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.