Analyst Estimates: Here's What Brokers Think Of Cheng Shin Rubber Ind. Co., Ltd. (TWSE:2105) After Its Yearly Report

Investors in Cheng Shin Rubber Ind. Co., Ltd. (TWSE:2105) had a good week, as its shares rose 4.1% to close at NT$48.20 following the release of its annual results. Results were roughly in line with estimates, with revenues of NT$96b and statutory earnings per share of NT$2.22. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Cheng Shin Rubber Ind

Following the latest results, Cheng Shin Rubber Ind's four analysts are now forecasting revenues of NT$98.8b in 2024. This would be a reasonable 2.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to step up 20% to NT$2.66. Before this earnings report, the analysts had been forecasting revenues of NT$106.5b and earnings per share (EPS) of NT$2.66 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The average price target was steady at NT$52.25even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. 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. The most optimistic Cheng Shin Rubber Ind analyst has a price target of NT$56.00 per share, while the most pessimistic values it at NT$50.00. This is a very narrow spread of estimates, implying either that Cheng Shin Rubber Ind is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Cheng Shin Rubber Ind is forecast to grow faster in the future than it has in the past, with revenues expected to display 2.7% annualised growth until the end of 2024. If achieved, this would be a much better result than the 2.3% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.1% annually for the foreseeable future. Although Cheng Shin Rubber Ind's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings per share are more important to value creation for shareholders. The consensus price target held steady at NT$52.25, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Cheng Shin Rubber Ind going out to 2025, 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 Cheng Shin Rubber Ind 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.