It's shaping up to be a tough period for Beijing LongRuan Technologies Inc. (SHSE:688078), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥396m missed by 16%, and statutory earnings per share of CN¥1.16 fell short of forecasts by 24%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Beijing LongRuan Technologies after the latest results.
Taking into account the latest results, the consensus forecast from Beijing LongRuan Technologies' five analysts is for revenues of CN¥438.0m in 2024. This reflects a solid 11% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 49% to CN¥1.75. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥621.0m and earnings per share (EPS) of CN¥2.09 in 2024. Indeed, we can see that the analysts are a lot more bearish about Beijing LongRuan Technologies' prospects following the latest results, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.
It'll come as no surprise then, to learn that the analysts have cut their price target 11% to CN¥49.20. 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. The most optimistic Beijing LongRuan Technologies analyst has a price target of CN¥62.59 per share, while the most pessimistic values it at CN¥35.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Beijing LongRuan Technologies shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Beijing LongRuan Technologies' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 25% 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 22% annually. Factoring in the forecast slowdown in growth, it seems obvious that Beijing LongRuan Technologies is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Beijing LongRuan Technologies. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Beijing LongRuan Technologies' future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Beijing LongRuan Technologies going out to 2025, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Beijing LongRuan Technologies you should know about.
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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.