Rianlon Corporation Just Missed EPS By 7.9%: Here's What Analysts Think Will Happen Next

It's been a pretty great week for Rianlon Corporation (SZSE:300596) shareholders, with its shares surging 19% to CN¥28.53 in the week since its latest yearly results. Rianlon beat revenue expectations by 5.7%, at CN¥5.3b. Statutory earnings per share (EPS) came in at CN¥1.58, some 7.9% short of analyst estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Rianlon after the latest results.

View our latest analysis for Rianlon

After the latest results, the six analysts covering Rianlon are now predicting revenues of CN¥6.14b in 2024. If met, this would reflect a decent 16% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 24% to CN¥1.97. In the lead-up to this report, the analysts had been modelling revenues of CN¥5.84b and earnings per share (EPS) of CN¥2.14 in 2024. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a decent to revenue, the consensus also made a small dip in its earnings per share forecasts.

The analysts also cut Rianlon's price target 7.6% to CN¥37.19, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in revenue. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Rianlon at CN¥49.00 per share, while the most bearish prices it at CN¥24.83. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Rianlon's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 16% growth on an annualised basis. This is compared to a historical growth rate of 26% over the past five years. Compare this to the 484 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 16% per year. Factoring in the forecast slowdown in growth, it looks like Rianlon is forecast to grow at about the same rate as 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 Rianlon. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Rianlon's future valuation.

Following on from that line of thought, we think that 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 Rianlon going out to 2026, and you can see them free on our platform here..

Even so, be aware that Rianlon is showing 2 warning signs in our investment analysis , you should know about...

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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.