Some Analysts Just Cut Their Yunnan Energy New Material Co., Ltd. (SZSE:002812) Estimates

One thing we could say about the analysts on Yunnan Energy New Material Co., Ltd. (SZSE:002812) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Shares are up 6.7% to CN¥41.61 in the past week. 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.

Following the downgrade, the latest consensus from Yunnan Energy New Material's 17 analysts is for revenues of CN¥13b in 2024, which would reflect a meaningful 13% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 59% to CN¥3.34. Prior to this update, the analysts had been forecasting revenues of CN¥15b and earnings per share (EPS) of CN¥3.34 in 2024. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a measurable cut to revenues and some minor tweaks to earnings numbers.

View our latest analysis for Yunnan Energy New Material

It will come as no surprise then, that the consensus price target fell 6.7% to CN¥51.90 following these changes.

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 Yunnan Energy New Material's revenue growth is expected to slow, with the forecast 18% annualised growth rate until the end of 2024 being well below the historical 33% 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) 16% annually. Factoring in the forecast slowdown in growth, it looks like Yunnan Energy New Material is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Yunnan Energy New Material's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Yunnan Energy New Material after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Yunnan Energy New Material 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 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.