News Flash: Analysts Just Made A Notable Upgrade To Their Dongjiang Environmental Company Limited (HKG:895) Forecasts

Celebrations may be in order for Dongjiang Environmental Company Limited (HKG:895) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Dongjiang Environmental will make substantially more sales than they'd previously expected.

Following the upgrade, the current consensus from Dongjiang Environmental's five analysts is for revenues of CN¥4.8b in 2021 which - if met - would reflect a sizeable 50% increase on its sales over the past 12 months. Statutory earnings per share are presumed to leap 82% to CN¥0.66. Prior to this update, the analysts had been forecasting revenues of CN¥4.3b and earnings per share (EPS) of CN¥0.63 in 2021. The most recent forecasts are noticeably more optimistic, with a nice gain to revenue estimates and a lift to earnings per share as well.

Check out our latest analysis for Dongjiang Environmental

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of CN¥6.10, suggesting that the forecast performance does not have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Dongjiang Environmental, with the most bullish analyst valuing it at CN¥8.12 and the most bearish at CN¥6.55 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Dongjiang Environmental's growth to accelerate, with the forecast 50% growth ranking favourably alongside historical growth of 7.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 22% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Dongjiang Environmental to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Dongjiang Environmental.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Dongjiang Environmental analysts - going out to 2022, and you can see them free on our platform here.

We also provide an overview of the Dongjiang Environmental 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. 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.
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