Bearish: Analysts Just Cut Their Yuexiu Services Group Limited (HKG:6626) Revenue and EPS estimates

One thing we could say about the analysts on Yuexiu Services Group Limited (HKG:6626) - 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 the analysts have soured majorly on the business.

Following the downgrade, the most recent consensus for Yuexiu Services Group from its four analysts is for revenues of CN¥2.6b in 2022 which, if met, would be a major 29% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 42% to CN¥0.37. Before this latest update, the analysts had been forecasting revenues of CN¥3.0b and earnings per share (EPS) of CN¥0.41 in 2022. Indeed, we can see that the analysts are a lot more bearish about Yuexiu Services Group's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Yuexiu Services Group

The consensus price target fell 8.0% to CN¥4.22, with the weaker earnings outlook clearly leading analyst valuation estimates. 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 Yuexiu Services Group, with the most bullish analyst valuing it at CN¥6.08 and the most bearish at CN¥4.00 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Yuexiu Services Group's past performance and to peers in the same industry. It's clear from the latest estimates that Yuexiu Services Group's rate of growth is expected to accelerate meaningfully, with the forecast 29% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 23% over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Yuexiu Services Group is expected to grow much faster than its 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Yuexiu Services Group.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Yuexiu Services Group 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.