Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (HKG:520) Analysts Just Slashed This Year's Estimates

One thing we could say about the analysts on Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (HKG:520) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After the downgrade, the consensus from Xiabuxiabu Catering Management (China) Holdings' 13 analysts is for revenues of CN¥4.7b in 2022, which would reflect a considerable 10% decline in sales compared to the last year of performance. The loss per share is anticipated to greatly reduce in the near future, narrowing 48% to CN¥0.25. Yet prior to the latest estimates, the analysts had been forecasting revenues of CN¥5.3b and losses of CN¥0.22 per share in 2022. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Xiabuxiabu Catering Management (China) Holdings

There was no major change to the consensus price target of CN¥7.72, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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. The most optimistic Xiabuxiabu Catering Management (China) Holdings analyst has a price target of CN¥11.35 per share, while the most pessimistic values it at CN¥3.69. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 19% by the end of 2022. This indicates a significant reduction from annual growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 28% annually for the foreseeable future. It's pretty clear that Xiabuxiabu Catering Management (China) Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Xiabuxiabu Catering Management (China) Holdings. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Xiabuxiabu Catering Management (China) Holdings' revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Xiabuxiabu Catering Management (China) Holdings after the downgrade.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Xiabuxiabu Catering Management (China) Holdings going out to 2025, and you can see them free on our platform here.

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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.