Analysts Just Made A Major Revision To Their Canvest Environmental Protection Group Company Limited (HKG:1381) Revenue Forecasts

The latest analyst coverage could presage a bad day for Canvest Environmental Protection Group Company Limited (HKG:1381), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Shares are up 4.1% to HK$4.03 in the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

After the downgrade, the six analysts covering Canvest Environmental Protection Group are now predicting revenues of HK$5.4b in 2024. If met, this would reflect a reasonable 7.7% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 33% to HK$0.55. Before this latest update, the analysts had been forecasting revenues of HK$6.1b and earnings per share (EPS) of HK$0.58 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a minor downgrade to earnings per share numbers as well.

See our latest analysis for Canvest Environmental Protection Group

Despite the cuts to forecast earnings, there was no real change to the HK$4.76 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

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. It's pretty clear that there is an expectation that Canvest Environmental Protection Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.7% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.6% per year. So it's pretty clear that, while Canvest Environmental Protection Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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 Canvest Environmental Protection Group. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Canvest Environmental Protection Group after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Canvest Environmental Protection Group analysts - going out to 2026, 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.