Things Look Grim For Brave C&H Supply Co.,Ltd. (GTSM:6538) After Today's Downgrade

Today is shaping up negative for Brave C&H Supply Co.,Ltd. (GTSM:6538) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the consensus from twin analysts covering Brave C&H SupplyLtd is for revenues of NT$1.8b in 2021, implying an uncomfortable 11% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to plummet 24% to NT$9.64 in the same period. Before this latest update, the analysts had been forecasting revenues of NT$2.2b and earnings per share (EPS) of NT$12.75 in 2021. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

See our latest analysis for Brave C&H SupplyLtd

The consensus price target fell 30% to NT$145, with the weaker earnings outlook clearly leading analyst valuation estimates. 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. Currently, the most bullish analyst values Brave C&H SupplyLtd at NT$160 per share, while the most bearish prices it at NT$130. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 11%, a significant reduction from annual growth of 4.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.8% next year. It's pretty clear that Brave C&H SupplyLtd's revenues are expected to perform substantially worse than the wider industry.

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 Brave C&H SupplyLtd. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Brave C&H SupplyLtd.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Brave C&H SupplyLtd going out as far as 2022, 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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