Weihai Guangwei Composites Co., Ltd. Just Missed EPS By 9.5%: Here's What Analysts Think Will Happen Next

It's been a good week for Weihai Guangwei Composites Co., Ltd. (SZSE:300699) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.4% to CN¥26.80. Revenues of CN¥644m beat forecasts by 16%, although statutory earnings per share disappointed slightly, coming in 9.5% below expectations at CN¥0.25. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Weihai Guangwei Composites

Taking into account the latest results, the consensus forecast from Weihai Guangwei Composites' eight analysts is for revenues of CN¥2.67b in 2024. This reflects a decent 9.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 9.7% to CN¥1.10. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥2.74b and earnings per share (EPS) of CN¥1.17 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

The analysts made no major changes to their price target of CN¥30.80, suggesting the downgrades are not expected to have a long-term impact on Weihai Guangwei Composites' valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Weihai Guangwei Composites analyst has a price target of CN¥34.00 per share, while the most pessimistic values it at CN¥28.20. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Weihai Guangwei Composites is an easy business to forecast or the the analysts are all using similar assumptions.

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 clear from the latest estimates that Weihai Guangwei Composites' rate of growth is expected to accelerate meaningfully, with the forecast 19% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 8.1% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 15% per year. Weihai Guangwei Composites is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their 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 held steady at CN¥30.80, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for Weihai Guangwei Composites going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Weihai Guangwei Composites (1 is a bit concerning) you should be aware of.

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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.