Earnings Miss: State Power Rixin Technology Co., Ltd. Missed EPS By 16% And Analysts Are Revising Their Forecasts

It's shaping up to be a tough period for State Power Rixin Technology Co., Ltd. (SZSE:301162), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥456m, statutory earnings missed forecasts by 16%, coming in at just CN¥0.83 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for State Power Rixin Technology

After the latest results, the nine analysts covering State Power Rixin Technology are now predicting revenues of CN¥598.7m in 2024. If met, this would reflect a huge 31% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 42% to CN¥1.21. In the lead-up to this report, the analysts had been modelling revenues of CN¥604.0m and earnings per share (EPS) of CN¥1.29 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥67.84, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values State Power Rixin Technology at CN¥80.00 per share, while the most bearish prices it at CN¥60.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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. It's clear from the latest estimates that State Power Rixin Technology's rate of growth is expected to accelerate meaningfully, with the forecast 31% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 19% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that State Power Rixin 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider 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 State Power Rixin Technology. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple State Power Rixin Technology analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for State Power Rixin Technology (1 is potentially serious) you should be aware 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.