Today is shaping up negative for Zhejiang Huangma Technology Co.,Ltd (SHSE:603181) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
Following the downgrade, the most recent consensus for Zhejiang Huangma TechnologyLtd from its three analysts is for revenues of CN¥2.3b in 2024 which, if met, would be a major 24% increase on its sales over the past 12 months. Statutory earnings per share are presumed to step up 15% to CN¥0.66. Before this latest update, the analysts had been forecasting revenues of CN¥3.2b and earnings per share (EPS) of CN¥0.78 in 2024. Indeed, we can see that the analysts are a lot more bearish about Zhejiang Huangma TechnologyLtd's prospects, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.
Analysts made no major changes to their price target of CN¥12.46, suggesting the downgrades are not expected to have a long-term impact on Zhejiang Huangma TechnologyLtd's valuation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Zhejiang Huangma TechnologyLtd's rate of growth is expected to accelerate meaningfully, with the forecast 24% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 3.5% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Zhejiang Huangma TechnologyLtd to grow faster 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 Zhejiang Huangma TechnologyLtd. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Zhejiang Huangma TechnologyLtd.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Zhejiang Huangma TechnologyLtd analysts - going out to 2026, 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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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.