Earnings Miss: Zhejiang Chengchang Technology Co., Ltd. Missed EPS By 55% And Analysts Are Revising Their Forecasts

The analysts might have been a bit too bullish on Zhejiang Chengchang Technology Co., Ltd. (SZSE:001270), given that the company fell short of expectations when it released its yearly results last week. Zhejiang Chengchang Technology delivered a grave earnings miss, with both revenues (CN¥287m) and statutory earnings per share (CN¥0.51) falling badly short of analyst expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Zhejiang Chengchang Technology after the latest results.

Check out our latest analysis for Zhejiang Chengchang Technology

Taking into account the latest results, the most recent consensus for Zhejiang Chengchang Technology from five analysts is for revenues of CN¥433.1m in 2024. If met, it would imply a huge 51% increase on its revenue over the past 12 months. Per-share earnings are expected to leap 86% to CN¥0.94. In the lead-up to this report, the analysts had been modelling revenues of CN¥586.8m and earnings per share (EPS) of CN¥1.57 in 2024. Indeed, we can see that the analysts are a lot more bearish about Zhejiang Chengchang Technology's prospects following the latest results, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 21% to CN¥80.59, with the weaker earnings outlook clearly leading valuation estimates. 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 Chengchang Technology, with the most bullish analyst valuing it at CN¥103 and the most bearish at CN¥60.00 per share. 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.

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. The analysts are definitely expecting Zhejiang Chengchang Technology's growth to accelerate, with the forecast 51% annualised growth to the end of 2024 ranking favourably alongside historical growth of 20% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Zhejiang Chengchang Technology is expected to grow much faster than its industry.

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. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Zhejiang Chengchang Technology going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 2 warning signs for Zhejiang Chengchang Technology (of which 1 is significant!) you should know about.

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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.