Sangfor Technologies Inc. Just Missed EPS By 16%: Here's What Analysts Think Will Happen Next

Sangfor Technologies Inc. (SZSE:300454) came out with its full-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It was not a great result overall. While revenues of CN¥7.7b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 16% to hit CN¥0.47 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Sangfor Technologies after the latest results.

Check out our latest analysis for Sangfor Technologies

Taking into account the latest results, the current consensus from Sangfor Technologies' 19 analysts is for revenues of CN¥8.54b in 2024. This would reflect a notable 11% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 65% to CN¥0.78. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥9.05b and earnings per share (EPS) of CN¥1.13 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 6.6% to CN¥72.87. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Sangfor Technologies analyst has a price target of CN¥114 per share, while the most pessimistic values it at CN¥45.40. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Sangfor Technologies' revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2024 being well below the historical 16% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 21% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Sangfor Technologies.

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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Sangfor Technologies' future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Sangfor Technologies going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Sangfor Technologies that you need to be mindful 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.