Analysts Have Lowered Expectations For Wanda Film Holding Co., Ltd. (SZSE:002739) After Its Latest Results

Last week, you might have seen that Wanda Film Holding Co., Ltd. (SZSE:002739) released its half-yearly result to the market. The early response was not positive, with shares down 4.4% to CN¥9.25 in the past week. Results overall were respectable, with statutory earnings of CN¥0.42 per share roughly in line with what the analysts had forecast. Revenues of CN¥6.2b came in 4.5% ahead of analyst predictions. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Wanda Film Holding

Following the recent earnings report, the consensus from eleven analysts covering Wanda Film Holding is for revenues of CN¥13.3b in 2024. This implies a noticeable 4.5% decline in revenue compared to the last 12 months. Statutory per-share earnings are expected to be CN¥0.27, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of CN¥15.8b and earnings per share (EPS) of CN¥0.59 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a large cut to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 14% to CN¥14.06. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Wanda Film Holding analyst has a price target of CN¥20.30 per share, while the most pessimistic values it at CN¥11.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that revenue is expected to reverse, with a forecast 8.7% annualised decline to the end of 2024. That is a notable change from historical growth of 0.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 14% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Wanda Film Holding is expected to lag 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 Wanda Film Holding. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Wanda Film Holding. Long-term earnings power is much more important than next year's profits. We have forecasts for Wanda Film Holding going out to 2026, and you can see them free on our platform here.

It might also be worth considering whether Wanda Film Holding's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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.