China Film Co., Ltd. (SHSE:600977) Analysts Just Slashed This Year's Estimates

Today is shaping up negative for China Film Co., Ltd. (SHSE:600977) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the latest consensus from China Film's six analysts is for revenues of CN¥5.9b in 2024, which would reflect a decent 9.7% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 177% to CN¥0.39. Prior to this update, the analysts had been forecasting revenues of CN¥6.9b and earnings per share (EPS) of CN¥0.51 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

See our latest analysis for China Film

Despite the cuts to forecast earnings, there was no real change to the CN¥12.03 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

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. For example, we noticed that China Film's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 9.7% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 18% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 15% per year. So although China Film's revenue growth is expected to improve, it is still expected to grow slower than the 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 China Film. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that China Film's revenues are expected to grow slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of China Film.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for China Film going out to 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.