Chengdu Xingrong Environment Co., Ltd. Just Missed Revenue By 5.1%: Here's What Analysts Think Will Happen Next

It's been a good week for Chengdu Xingrong Environment Co., Ltd. (SZSE:000598) shareholders, because the company has just released its latest annual results, and the shares gained 6.3% to CN¥7.23. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥8.1b, statutory earnings were in line with expectations, at CN¥0.62 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.

See our latest analysis for Chengdu Xingrong Environment

Taking into account the latest results, the consensus forecast from Chengdu Xingrong Environment's one analyst is for revenues of CN¥8.91b in 2024. This reflects a notable 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to ascend 11% to CN¥0.69. Yet prior to the latest earnings, the analyst had been anticipated revenues of CN¥9.37b and earnings per share (EPS) of CN¥0.68 in 2024. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.

The analyst has also increased their price target 22% to CN¥8.28, clearly signalling that lower revenue forecasts next year are not expected to have a material impact on Chengdu Xingrong Environment's valuation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Chengdu Xingrong Environment's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 8.7% annually. Factoring in the forecast slowdown in growth, it looks like Chengdu Xingrong Environment is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analyst holding their earnings forecasts steady, in line with previous estimates. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. With that said, earnings are more important to the long-term value of the business. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Chengdu Xingrong Environment. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Chengdu Xingrong Environment going out as far as 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Chengdu Xingrong Environment 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.