Earnings Miss: Shenzhen Sunway Communication Co., Ltd. Missed EPS By 7.1% And Analysts Are Revising Their Forecasts

It's been a good week for Shenzhen Sunway Communication Co., Ltd. (SZSE:300136) shareholders, because the company has just released its latest first-quarter results, and the shares gained 5.8% to CN¥18.66. Shenzhen Sunway Communication beat revenue expectations by 5.3%, at CN¥1.9b. Statutory earnings per share (EPS) came in at CN¥0.16, some 7.1% short of analyst estimates. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Shenzhen Sunway Communication

Following the latest results, Shenzhen Sunway Communication's two analysts are now forecasting revenues of CN¥8.62b in 2024. This would be a solid 12% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 30% to CN¥0.71. Before this earnings report, the analysts had been forecasting revenues of CN¥10.1b and earnings per share (EPS) of CN¥1.02 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a pretty serious reduction to earnings per share numbers as well.

The average price target climbed 19% to CN¥22.43despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Shenzhen Sunway Communication's rate of growth is expected to accelerate meaningfully, with the forecast 17% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 11% p.a. 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 22% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Shenzhen Sunway Communication is expected to grow slower than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shenzhen Sunway Communication. 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. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

You can also view our analysis of Shenzhen Sunway Communication's balance sheet, and whether we think Shenzhen Sunway Communication is carrying too much debt, for free on our platform here.

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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.