Downgrade: Here's How This Analyst Sees Yanlord Land Group Limited (SGX:Z25) Performing In The Near Term

Market forces rained on the parade of Yanlord Land Group Limited (SGX:Z25) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the solo analyst covering Yanlord Land Group is now predicting revenues of CN¥32b in 2023. If met, this would reflect a meaningful 11% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 41% to CN¥1.12. Before this latest update, the analyst had been forecasting revenues of CN¥36b and earnings per share (EPS) of CN¥1.41 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for Yanlord Land Group

Despite the cuts to forecast earnings, there was no real change to the S$1.22 price target, showing that the analyst don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Yanlord Land Group analyst has a price target of S$1.43 per share, while the most pessimistic values it at S$1.00. 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 Yanlord Land Group shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analyst is definitely expecting Yanlord Land Group's growth to accelerate, with the forecast 11% annualised growth to the end of 2023 ranking favourably alongside historical growth of 5.8% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.2% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Yanlord Land Group to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Yanlord Land Group. Unfortunately, the analyst 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 Yanlord Land Group after the downgrade.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2025, which can be seen for 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.