Weichai Power Co., Ltd. (HKG:2338) Just Reported First-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?

Weichai Power Co., Ltd. (HKG:2338) shareholders are probably feeling a little disappointed, since its shares fell 2.7% to HK$16.10 in the week after its latest quarterly results. Revenues were CN¥56b, with Weichai Power reporting some 4.1% below analyst expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Weichai Power after the latest results.

View our latest analysis for Weichai Power

Taking into account the latest results, the consensus forecast from Weichai Power's 16 analysts is for revenues of CN¥232.5b in 2024. This reflects an okay 7.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 23% to CN¥1.39. In the lead-up to this report, the analysts had been modelling revenues of CN¥234.6b and earnings per share (EPS) of CN¥1.32 in 2024. So the consensus seems to have become somewhat more optimistic on Weichai Power's earnings potential following these results.

There's been no major changes to the consensus price target of HK$19.02, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Weichai Power, with the most bullish analyst valuing it at HK$22.94 and the most bearish at HK$15.08 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Weichai Power's past performance and to peers in the same industry. The analysts are definitely expecting Weichai Power's growth to accelerate, with the forecast 9.7% annualised growth to the end of 2024 ranking favourably alongside historical growth of 3.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. Weichai Power is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Weichai Power following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Weichai Power analysts - 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 Weichai Power 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.