Dongfeng Motor Group Company Limited Just Missed Earnings; Here's What Analysts Are Forecasting Now

Last week, you might have seen that Dongfeng Motor Group Company Limited (HKG:489) released its annual result to the market. The early response was not positive, with shares down 5.5% to HK$3.27 in the past week. Revenues of CN¥99b beat expectations by 6.1%. Unfortunately statutory earnings per share (EPS) fell well short of the mark, turning in a loss of CN¥0.47 compared to previous analyst expectations of a profit. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Dongfeng Motor Group

Following last week's earnings report, Dongfeng Motor Group's nine analysts are forecasting 2024 revenues to be CN¥101.3b, approximately in line with the last 12 months. Earnings are expected to improve, with Dongfeng Motor Group forecast to report a statutory profit of CN¥0.16 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥99.8b and earnings per share (EPS) of CN¥0.51 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.

The consensus price target held steady at HK$3.70, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Dongfeng Motor Group at HK$6.10 per share, while the most bearish prices it at HK$2.95. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. From these estimates it looks as though the analysts expect the years of declining revenue to come to an end, given the flat forecast out to 2024. That would be a definite improvement, given that the past five years have seen revenue shrink 1.5% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 13% per year. So it's pretty clear that, although revenues are improving, Dongfeng Motor Group is still expected to grow slower than the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Dongfeng Motor Group. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Dongfeng Motor Group analysts - going out to 2026, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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.