It's shaping up to be a tough period for Wankai New Materials Co., Ltd. (SZSE:301216), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. Unfortunately, Wankai New Materials delivered a serious earnings miss. Revenues of CN¥18b were 10% below expectations, and statutory earnings per share of CN¥0.85 missed estimates by 27%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Wankai New Materials' twin analysts are now forecasting revenues of CN¥24.6b in 2024. This would be a sizeable 40% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 62% to CN¥1.37. Before this earnings report, the analysts had been forecasting revenues of CN¥23.2b and earnings per share (EPS) of CN¥1.64 in 2024. While next year's revenue estimates increased, there was also a substantial drop in EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
The consensus price target fell 31% to CN¥17.00, suggesting that the analysts are primarily focused on earnings as the driver of value for this business.
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. The analysts are definitely expecting Wankai New Materials' growth to accelerate, with the forecast 40% annualised growth to the end of 2024 ranking favourably alongside historical growth of 16% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Wankai New Materials to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Wankai New Materials. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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 analyst estimates for Wankai New Materials going out as far as 2026, and you can see them free on our platform here.
Even so, be aware that Wankai New Materials is showing 3 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...
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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.