Earnings Miss: Xiabuxiabu Catering Management (China) Holdings Co., Ltd. Missed EPS And Analysts Are Revising Their Forecasts

Last week, you might have seen that Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (HKG:520) released its annual result to the market. The early response was not positive, with shares down 3.0% to HK$1.59 in the past week. It was a pretty negative result overall, with revenues of CN¥5.9b missing analyst predictions by 4.0%. Worse, the business reported a statutory loss of CN¥0.19 per share, a substantial decline on analyst expectations of a profit. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Xiabuxiabu Catering Management (China) Holdings

Following the latest results, Xiabuxiabu Catering Management (China) Holdings' 14 analysts are now forecasting revenues of CN¥6.33b in 2024. This would be a reasonable 7.0% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Xiabuxiabu Catering Management (China) Holdings forecast to report a statutory profit of CN¥0.26 per share. Before this earnings report, the analysts had been forecasting revenues of CN¥7.56b and earnings per share (EPS) of CN¥0.24 in 2024. Indeed we can see that the consensus opinion has undergone some fundamental changes after the latest results, with a real cut to revenues at the same time as boosting EPS forecasts.

The consensus price target fell 8.8% to HK$3.62, with the analysts signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Xiabuxiabu Catering Management (China) Holdings, with the most bullish analyst valuing it at HK$4.93 and the most bearish at HK$1.50 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. The analysts are definitely expecting Xiabuxiabu Catering Management (China) Holdings' growth to accelerate, with the forecast 7.0% annualised growth to the end of 2024 ranking favourably alongside historical growth of 0.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 13% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Xiabuxiabu Catering Management (China) Holdings is expected to grow slower than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Xiabuxiabu Catering Management (China) Holdings' earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings per share are more important to value creation for shareholders. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 Xiabuxiabu Catering Management (China) Holdings analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Xiabuxiabu Catering Management (China) Holdings 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.