One thing we could say about the analysts on Dongguan Dingtong Precision Metal Co., Ltd. (SHSE:688668) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Shares are up 8.5% to CN¥72.80 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the downgrade, the current consensus from Dongguan Dingtong Precision Metal's five analysts is for revenues of CN¥1.1b in 2023 which - if met - would reflect a substantial 36% increase on its sales over the past 12 months. Per-share earnings are expected to jump 36% to CN¥2.34. Before this latest update, the analysts had been forecasting revenues of CN¥1.3b and earnings per share (EPS) of CN¥2.54 in 2023. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a minor downgrade to earnings per share numbers as well.
Check out our latest analysis for Dongguan Dingtong Precision Metal
The consensus price target fell 8.1% to CN¥75.95, with the weaker earnings outlook clearly leading analyst valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Dongguan Dingtong Precision Metal at CN¥88.00 per share, while the most bearish prices it at CN¥63.90. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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 Dongguan Dingtong Precision Metal's growth to accelerate, with the forecast 36% annualised growth to the end of 2023 ranking favourably alongside historical growth of 29% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 25% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Dongguan Dingtong Precision Metal to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Dongguan Dingtong Precision Metal after today.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Dongguan Dingtong Precision Metal, including dilutive stock issuance over the past year. Learn more, and discover the 2 other flags we've identified, for free on our platform here.
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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.