Time To Worry? Analysts Are Downgrading Their China Vanke Co., Ltd. (SZSE:000002) Outlook

The latest analyst coverage could presage a bad day for China Vanke Co., Ltd. (SZSE:000002), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the consensus from 22 analysts covering China Vanke is for revenues of CN¥377b in 2024, implying a chunky 19% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to dip 9.1% to CN¥0.93 in the same period. Before this latest update, the analysts had been forecasting revenues of CN¥431b and earnings per share (EPS) of CN¥1.59 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

Check out our latest analysis for China Vanke

The consensus price target fell 19% to CN¥9.86, with the weaker earnings outlook clearly leading analyst valuation estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the China Vanke's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 19% by the end of 2024. This indicates a significant reduction from annual growth of 9.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.5% annually for the foreseeable future. It's pretty clear that China Vanke's revenues are expected to perform substantially worse than the wider 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 Vanke. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that China Vanke's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of China Vanke.

There might be good reason for analyst bearishness towards China Vanke, like its declining profit margins. Learn more, and discover the 1 other flag we've identified, for 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.