Earnings Report: Zhejiang Dahua Technology Co., Ltd. Missed Revenue Estimates By 9.9%

Zhejiang Dahua Technology Co., Ltd. (SZSE:002236) just released its latest quarterly report and things are not looking great. Zhejiang Dahua Technology missed analyst forecasts, with revenues of CN¥8.7b and statutory earnings per share (EPS) of CN¥0.39, falling short by 9.9% and 2.6% respectively. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Zhejiang Dahua Technology

Taking into account the latest results, the consensus forecast from Zhejiang Dahua Technology's 13 analysts is for revenues of CN¥33.4b in 2024. This reflects a modest 2.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dive 52% to CN¥1.05 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥35.6b and earnings per share (EPS) of CN¥1.23 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

The consensus price target fell 12% to CN¥19.80, with the weaker earnings outlook clearly leading valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Zhejiang Dahua Technology analyst has a price target of CN¥26.68 per share, while the most pessimistic values it at CN¥14.15. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 5.9% growth on an annualised basis. That is in line with its 5.9% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 18% per year. So although Zhejiang Dahua Technology is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Zhejiang Dahua Technology going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for Zhejiang Dahua Technology (1 doesn't sit too well with us!) that you should be aware of.

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.