Downgrade: Here's How Analysts See TCL Zhonghuan Renewable Energy Technology Co.,Ltd. (SZSE:002129) Performing In The Near Term

The analysts covering TCL Zhonghuan Renewable Energy Technology Co.,Ltd. (SZSE:002129) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Shares are up 6.5% to CN¥10.43 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After the downgrade, the consensus from TCL Zhonghuan Renewable Energy TechnologyLtd's 14 analysts is for revenues of CN¥50b in 2024, which would reflect a small 3.3% decline in sales compared to the last year of performance. Statutory earnings per share are presumed to soar 769% to CN¥0.61. Prior to this update, the analysts had been forecasting revenues of CN¥81b and earnings per share (EPS) of CN¥2.13 in 2024. Indeed, we can see that the analysts are a lot more bearish about TCL Zhonghuan Renewable Energy TechnologyLtd's prospects, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for TCL Zhonghuan Renewable Energy TechnologyLtd

It'll come as no surprise then, to learn that the analysts have cut their price target 14% to CN¥19.83.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 4.4% by the end of 2024. This indicates a significant reduction from annual growth of 33% 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 23% annually for the foreseeable future. It's pretty clear that TCL Zhonghuan Renewable Energy TechnologyLtd's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that TCL Zhonghuan Renewable Energy TechnologyLtd's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

There might be good reason for analyst bearishness towards TCL Zhonghuan Renewable Energy TechnologyLtd, like the risk of cutting its dividend. For more information, you can click here to discover this and the 2 other warning signs we've identified.

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.

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.