Jiumaojiu International Holdings Limited (HKG:9922) Analysts Are Reducing Their Forecasts For This Year

One thing we could say about the analysts on Jiumaojiu International Holdings Limited (HKG:9922) - 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) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from Jiumaojiu International Holdings' 25 analysts is for revenues of CN¥4.8b in 2022, which would reflect a meaningful 18% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 42% to CN¥0.21. Previously, the analysts had been modelling revenues of CN¥5.4b and earnings per share (EPS) of CN¥0.28 in 2022. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

See our latest analysis for Jiumaojiu International Holdings

Analysts made no major changes to their price target of CN¥17.69, suggesting the downgrades are not expected to have a long-term impact on Jiumaojiu International Holdings' 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. Currently, the most bullish analyst values Jiumaojiu International Holdings at CN¥24.83 per share, while the most bearish prices it at CN¥17.12. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Jiumaojiu International Holdings shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Jiumaojiu International Holdings' past performance and to peers in the same industry. It's clear from the latest estimates that Jiumaojiu International Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 38% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 23% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 29% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Jiumaojiu International Holdings to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better 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 Jiumaojiu International Holdings after the downgrade.

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 Jiumaojiu International Holdings analysts - going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.