Earnings Miss: Beijing Tongrentang Co., Ltd Missed EPS By 20% And Analysts Are Revising Their Forecasts

Beijing Tongrentang Co., Ltd (SHSE:600085) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥4.5b missed by 11%, and statutory earnings per share of CN¥0.32 fell short of forecasts by 20%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Beijing Tongrentang after the latest results.

View our latest analysis for Beijing Tongrentang

Following the latest results, Beijing Tongrentang's 14 analysts are now forecasting revenues of CN¥19.5b in 2024. This would be a meaningful 9.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to ascend 10% to CN¥1.37. In the lead-up to this report, the analysts had been modelling revenues of CN¥20.2b and earnings per share (EPS) of CN¥1.40 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 5.2% to CN¥49.79. 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. The most optimistic Beijing Tongrentang analyst has a price target of CN¥60.00 per share, while the most pessimistic values it at CN¥34.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Beijing Tongrentang's past performance and to peers in the same industry. It's clear from the latest estimates that Beijing Tongrentang's rate of growth is expected to accelerate meaningfully, with the forecast 20% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 7.8% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Beijing Tongrentang is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Beijing Tongrentang. They also downgraded Beijing Tongrentang's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. 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 Beijing Tongrentang. Long-term earnings power is much more important than next year's profits. We have forecasts for Beijing Tongrentang 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 Beijing Tongrentang (1 shouldn't be ignored) 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.