Shihlin Electric & Engineering Corp. (TWSE:1503) Just Reported And Analysts Have Been Cutting Their Estimates

Investors in Shihlin Electric & Engineering Corp. (TWSE:1503) had a good week, as its shares rose 2.3% to close at NT$223 following the release of its quarterly results. It was a credible result overall, with revenues of NT$8.2b and statutory earnings per share of NT$1.36 both in line with analyst estimates, showing that Shihlin Electric & Engineering is executing in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Shihlin Electric & Engineering

After the latest results, the three analysts covering Shihlin Electric & Engineering are now predicting revenues of NT$35.8b in 2024. If met, this would reflect a satisfactory 7.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 26% to NT$6.90. Yet prior to the latest earnings, the analysts had been anticipated revenues of NT$38.6b and earnings per share (EPS) of NT$7.65 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.7% to NT$299. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Shihlin Electric & Engineering at NT$401 per share, while the most bearish prices it at NT$220. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Shihlin Electric & Engineering's growth to accelerate, with the forecast 16% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. Shihlin Electric & Engineering is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shihlin Electric & Engineering. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Shihlin Electric & Engineering's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Shihlin Electric & Engineering analysts - going out to 2025, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Shihlin Electric & Engineering , and understanding this should be part of your investment process.

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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.