Today is shaping up negative for Guangxi Fenglin Wood Industry Group Co.,Ltd (SHSE:601996) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.
After this downgrade, Guangxi Fenglin Wood Industry GroupLtd's solitary analyst is now forecasting revenues of CN¥2.6b in 2024. This would be a notable 13% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 72% to CN¥0.08. Prior to this update, the analyst had been forecasting revenues of CN¥3.0b and earnings per share (EPS) of CN¥0.14 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.
It'll come as no surprise then, to learn that the analyst has cut their price target 12% to CN¥3.04.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Guangxi Fenglin Wood Industry GroupLtd's rate of growth is expected to accelerate meaningfully, with the forecast 13% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.5% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 12% per year. Guangxi Fenglin Wood Industry GroupLtd is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2026, 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 that insiders are buying.
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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.