The Consensus EPS Estimates For China Yongda Automobiles Services Holdings Limited (HKG:3669) Just Fell Dramatically

Market forces rained on the parade of China Yongda Automobiles Services Holdings Limited (HKG:3669) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After this downgrade, China Yongda Automobiles Services Holdings' 22 analysts are now forecasting revenues of CN¥75b in 2022. This would be a decent 9.4% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to increase 5.5% to CN¥1.04. Prior to this update, the analysts had been forecasting revenues of CN¥85b and earnings per share (EPS) of CN¥1.24 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

See our latest analysis for China Yongda Automobiles Services Holdings

It'll come as no surprise then, to learn that the analysts have cut their price target 9.8% to CN¥9.35. 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 China Yongda Automobiles Services Holdings at CN¥21.33 per share, while the most bearish prices it at CN¥6.50. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting China Yongda Automobiles Services Holdings' growth to accelerate, with the forecast 20% annualised growth to the end of 2022 ranking favourably alongside historical growth of 10.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that China Yongda Automobiles Services Holdings is expected to grow much faster than its industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for China Yongda Automobiles Services Holdings. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to 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 China Yongda Automobiles Services Holdings.

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 China Yongda Automobiles Services Holdings going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.