It's been a good week for Suzhou Weizhixiang Food Co., Ltd. (SHSE:605089) shareholders, because the company has just released its latest second-quarter results, and the shares gained 4.9% to CN¥18.13. Revenues were CN¥161m, 17% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of CN¥0.98 being in line with what the analysts anticipated. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the four analysts covering Suzhou Weizhixiang Food provided consensus estimates of CN¥645.0m revenue in 2024, which would reflect an uneasy 9.1% decline over the past 12 months. Statutory earnings per share are expected to sink 13% to CN¥0.65 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥801.6m and earnings per share (EPS) of CN¥1.09 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a pretty serious reduction to earnings per share numbers as well.
The consensus price target fell 30% to CN¥22.54, with the weaker earnings outlook clearly leading valuation estimates. 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. There are some variant perceptions on Suzhou Weizhixiang Food, with the most bullish analyst valuing it at CN¥29.92 and the most bearish at CN¥17.70 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 17% by the end of 2024. This indicates a significant reduction from annual growth of 1.4% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% per year. It's pretty clear that Suzhou Weizhixiang Food's revenues are expected to perform substantially worse than the wider industry.
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. 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 Suzhou Weizhixiang Food's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Suzhou Weizhixiang Food. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Suzhou Weizhixiang Food analysts - going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Suzhou Weizhixiang Food you should be aware of.
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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.
