Zhejiang Jingsheng Mechanical & Electrical Co., Ltd. Just Missed Earnings - But Analysts Have Updated Their Models

It's been a sad week for Zhejiang Jingsheng Mechanical & Electrical Co., Ltd. (SZSE:300316), who've watched their investment drop 13% to CN¥23.37 in the week since the company reported its second-quarter result. It looks like a pretty bad result, all things considered. Although revenues of CN¥5.6b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 27% to hit CN¥0.78 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Zhejiang Jingsheng Mechanical & Electrical

Taking into account the latest results, the consensus forecast from Zhejiang Jingsheng Mechanical & Electrical's eight analysts is for revenues of CN¥22.2b in 2024. This reflects a solid 13% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 9.3% to CN¥3.72. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥21.5b and earnings per share (EPS) of CN¥4.08 in 2024. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a solid to revenue, the consensus also made a small dip in its earnings per share forecasts.

The consensus price target was unchanged at CN¥34.79, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Zhejiang Jingsheng Mechanical & Electrical at CN¥43.00 per share, while the most bearish prices it at CN¥29.00. 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.

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. It's pretty clear that there is an expectation that Zhejiang Jingsheng Mechanical & Electrical's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 27% growth on an annualised basis. This is compared to a historical growth rate of 43% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 22% annually. So it's pretty clear that, while Zhejiang Jingsheng Mechanical & Electrical's revenue growth is expected to slow, it's expected to grow roughly in line with the 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. They also upgraded their revenue forecasts, although the latest estimates suggest that Zhejiang Jingsheng Mechanical & Electrical will grow in line with the overall 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Zhejiang Jingsheng Mechanical & Electrical. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Zhejiang Jingsheng Mechanical & Electrical analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Zhejiang Jingsheng Mechanical & Electrical has 2 warning signs (and 1 which makes us a bit uncomfortable) we think 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.