Analysts Just Slashed Their Zhejiang Hechuan Technology Co., Ltd. (SHSE:688320) EPS Numbers

The analysts covering Zhejiang Hechuan Technology Co., Ltd. (SHSE:688320) 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) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Bidders are definitely seeing a different story, with the stock price of CN¥33.58 reflecting a 17% rise in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

Following the downgrade, the most recent consensus for Zhejiang Hechuan Technology from its twin analysts is for revenues of CN¥1.3b in 2024 which, if met, would be a meaningful 13% increase on its sales over the past 12 months. Statutory earnings per share are presumed to jump 70% to CN¥0.60. Prior to this update, the analysts had been forecasting revenues of CN¥1.6b and earnings per share (EPS) of CN¥0.90 in 2024. Indeed, we can see that the analysts are a lot more bearish about Zhejiang Hechuan Technology's prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Zhejiang Hechuan Technology

The consensus price target fell 5.5% to CN¥34.60, with the weaker earnings outlook clearly leading analyst valuation estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Zhejiang Hechuan Technology's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2024 being well below the historical 23% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 19% per year. Factoring in the forecast slowdown in growth, it seems obvious that Zhejiang Hechuan Technology is also expected to grow slower than other industry participants.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Zhejiang Hechuan Technology. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Zhejiang Hechuan Technology.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Zhejiang Hechuan Technology going out as far as 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.