Weihai Guangwei Composites Co., Ltd. Just Missed Earnings - But Analysts Have Updated Their Models

The analysts might have been a bit too bullish on Weihai Guangwei Composites Co., Ltd. (SZSE:300699), given that the company fell short of expectations when it released its annual results last week. Weihai Guangwei Composites missed earnings this time around, with CN¥2.5b revenue coming in 5.1% below what the analysts had modelled. Statutory earnings per share (EPS) of CN¥1.05 also fell short of expectations by 12%. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Weihai Guangwei Composites

Taking into account the latest results, the most recent consensus for Weihai Guangwei Composites from nine analysts is for revenues of CN¥3.06b in 2024. If met, it would imply a substantial 22% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to step up 20% to CN¥1.26. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥3.07b and earnings per share (EPS) of CN¥1.25 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The consensus price target rose 5.2% to CN¥34.12despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Weihai Guangwei Composites' earnings by assigning a price premium. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Weihai Guangwei Composites analyst has a price target of CN¥40.40 per share, while the most pessimistic values it at CN¥29.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Weihai Guangwei Composites' past performance and to peers in the same industry. It's clear from the latest estimates that Weihai Guangwei Composites' rate of growth is expected to accelerate meaningfully, with the forecast 22% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Weihai Guangwei Composites to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. 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. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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. We have estimates - from multiple Weihai Guangwei Composites analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Weihai Guangwei Composites (at least 1 which is potentially serious) , and understanding these should be part of your investment process.

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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.