Earnings Miss: S-Enjoy Service Group Co., Limited Missed EPS By 11% And Analysts Are Revising Their Forecasts

It's shaping up to be a tough period for S-Enjoy Service Group Co., Limited (HKG:1755), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥5.4b, statutory earnings missed forecasts by 11%, coming in at just CN¥0.51 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for S-Enjoy Service Group

Following the latest results, S-Enjoy Service Group's nine analysts are now forecasting revenues of CN¥5.72b in 2024. This would be a satisfactory 5.4% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be CN¥0.52, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of CN¥6.53b and earnings per share (EPS) of CN¥0.72 in 2024. Indeed, we can see that the analysts are a lot more bearish about S-Enjoy Service Group's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

It'll come as no surprise then, to learn that the analysts have cut their price target 14% to HK$4.75. 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 S-Enjoy Service Group, with the most bullish analyst valuing it at HK$7.00 and the most bearish at HK$2.92 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the S-Enjoy Service Group's past performance and to peers in the same industry. It's pretty clear that there is an expectation that S-Enjoy Service Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.4% growth on an annualised basis. This is compared to a historical growth rate of 28% over the past five years. Compare this to the 252 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.2% per year. Factoring in the forecast slowdown in growth, it looks like S-Enjoy Service Group is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for S-Enjoy Service Group. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on S-Enjoy Service Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple S-Enjoy Service Group analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for S-Enjoy Service Group that you need to be mindful 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.