Revenue Miss: Zhejiang Huace Film & TV Co., Ltd. Fell 59% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models

Shareholders of Zhejiang Huace Film & TV Co., Ltd. (SZSE:300133) will be pleased this week, given that the stock price is up 16% to CN¥8.00 following its latest quarterly results. Zhejiang Huace Film & TV reported a serious miss, with revenue of CN¥177m falling a huge 59% short of analyst estimates. The bright side is that statutory earnings per share of CN¥0.20 were in line with forecasts. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Zhejiang Huace Film & TV

After the latest results, the seven analysts covering Zhejiang Huace Film & TV are now predicting revenues of CN¥3.07b in 2024. If met, this would reflect a huge 107% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 112% to CN¥0.30. Before this earnings report, the analysts had been forecasting revenues of CN¥3.93b and earnings per share (EPS) of CN¥0.33 in 2024. Indeed, we can see that sentiment has declined measurably after results came out, with a pretty serious reduction to revenue estimates and a minor downgrade to EPS estimates to boot.

The analysts made no major changes to their price target of CN¥5.97, suggesting the downgrades are not expected to have a long-term impact on Zhejiang Huace Film & TV's valuation. 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. There are some variant perceptions on Zhejiang Huace Film & TV, with the most bullish analyst valuing it at CN¥7.40 and the most bearish at CN¥5.20 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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 Zhejiang Huace Film & TV's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 164% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 13% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 16% per year. So it looks like Zhejiang Huace Film & TV is expected to grow faster than its competitors, at least for a while.

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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Zhejiang Huace Film & TV going out to 2025, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 1 warning sign for Zhejiang Huace Film & TV that you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.