It's shaping up to be a tough period for Moon Environment Technology Co.,Ltd. (SZSE:000811), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. Results look to have been somewhat negative - revenue fell 7.6% short of analyst estimates at CN¥7.5b, and statutory earnings of CN¥0.88 per share missed forecasts by 5.4%. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from Moon Environment TechnologyLtd's three analysts is for revenues of CN¥8.24b in 2024. This reflects a decent 10.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to grow 16% to CN¥0.99. Before this earnings report, the analysts had been forecasting revenues of CN¥10.1b and earnings per share (EPS) of CN¥1.14 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a substantial drop in earnings per share numbers as well.
The consensus price target fell 20% to CN¥14.56, with the weaker earnings outlook clearly leading 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 Moon Environment TechnologyLtd at CN¥15.00 per share, while the most bearish prices it at CN¥14.11. This is a very narrow spread of estimates, implying either that Moon Environment TechnologyLtd is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Moon Environment TechnologyLtd's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 10.0% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 19% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Moon Environment TechnologyLtd.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Moon Environment TechnologyLtd's future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Moon Environment TechnologyLtd going out to 2025, and you can see them free on our platform here.
You still need to take note of risks, for example - Moon Environment TechnologyLtd has 2 warning signs we think you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.