The Consensus EPS Estimates For Chung Hung Steel Corporation (TWSE:2014) Just Fell A Lot

One thing we could say about the analysts on Chung Hung Steel Corporation (TWSE:2014) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the dual analysts covering Chung Hung Steel, is for revenues of NT$34b in 2024, which would reflect a discernible 4.8% reduction in Chung Hung Steel's sales over the past 12 months. Losses are expected to be contained, narrowing 18% per share from last year to NT$0.13 per share. Previously, the analysts had been modelling revenues of NT$38b and earnings per share (EPS) of NT$0.67 in 2024. So we can see that the consensus has become notably more bearish on Chung Hung Steel's outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

Check out our latest analysis for Chung Hung Steel

The consensus price target was broadly unchanged at NT$25.10, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

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. One more thing stood out to us about these estimates, and it's the idea that Chung Hung Steel's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 9.3% to the end of 2024. This tops off a historical decline of 1.0% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 4.8% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Chung Hung Steel to suffer worse than the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Chung Hung Steel dropped from profits to a loss this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower 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 Chung Hung Steel after the downgrade.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2025, which can be seen for 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 backed by insiders.

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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.