This Chongqing Water Group Co.,Ltd. (SHSE:601158) Analyst Is Way More Bearish Than They Used To Be

Today is shaping up negative for Chongqing Water Group Co.,Ltd. (SHSE:601158) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from Chongqing Water GroupLtd's one analyst is for revenues of CN¥7.9b in 2024, which would reflect a solid 8.6% improvement in sales compared to the last 12 months. Per-share earnings are expected to swell 10% to CN¥0.25. Prior to this update, the analyst had been forecasting revenues of CN¥9.0b and earnings per share (EPS) of CN¥0.38 in 2024. Indeed, we can see that the analyst is a lot more bearish about Chongqing Water GroupLtd's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Chongqing Water GroupLtd

Despite the cuts to forecast earnings, there was no real change to the CN¥7.33 price target, showing that the analyst don't think the changes have a meaningful impact on its intrinsic value.

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 analyst, with revenue forecast to display 8.6% growth on an annualised basis. That is in line with its 9.2% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 9.3% annually. It's clear that while Chongqing Water GroupLtd's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Chongqing Water GroupLtd after the downgrade.

Worse, Chongqing Water GroupLtd is labouring under a substantial debt burden, which - if today's forecasts prove accurate - the forecast downgrade could potentially exacerbate. You can learn more about our debt analysis for free on our platform here.

We also provide an overview of the Chongqing Water GroupLtd Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, 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.