CN¥81.25 - That's What Analysts Think Shennan Circuit Company Limited (SZSE:002916) Is Worth After These Results

Shennan Circuit Company Limited (SZSE:002916) 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 a workmanlike result, with revenues of CN¥14b coming in 2.6% ahead of expectations, and statutory earnings per share of CN¥2.73, in line with analyst appraisals. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Shennan Circuit

Following the latest results, Shennan Circuit's 13 analysts are now forecasting revenues of CN¥15.3b in 2024. This would be a decent 13% improvement in revenue compared to the last 12 months. Per-share earnings are expected to climb 15% to CN¥3.13. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥15.7b and earnings per share (EPS) of CN¥3.29 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

What's most unexpected is that the consensus price target rose 6.3% to CN¥81.25, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Shennan Circuit, with the most bullish analyst valuing it at CN¥105 and the most bearish at CN¥58.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Shennan Circuit's growth to accelerate, with the forecast 13% annualised growth to the end of 2024 ranking favourably alongside historical growth of 9.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 19% per year. So it's clear that despite the acceleration in growth, Shennan Circuit is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shennan Circuit. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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

However, before you get too enthused, we've discovered 1 warning sign for Shennan Circuit that 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.