As you might know, Zhejiang HangKe Technology Incorporated Company (SHSE:688006) last week released its latest quarterly, and things did not turn out so great for shareholders. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥1.0b missed by 18%, and statutory earnings per share of CN¥0.16 fell short of forecasts by 53%. 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 Zhejiang HangKe Technology after the latest results.
Taking into account the latest results, the current consensus from Zhejiang HangKe Technology's six analysts is for revenues of CN¥4.00b in 2024. This would reflect an okay 7.9% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to soar 62% to CN¥1.62. In the lead-up to this report, the analysts had been modelling revenues of CN¥4.76b and earnings per share (EPS) of CN¥1.66 in 2024. It looks like sentiment has fallen somewhat in the aftermath of these results, with a real cut to revenue estimates and a minor downgrade to earnings per share numbers as well.
The consensus price target fell 5.4% to CN¥24.52, with the weaker earnings outlook clearly leading valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Zhejiang HangKe Technology at CN¥30.00 per share, while the most bearish prices it at CN¥17.00. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Zhejiang HangKe Technology's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 17% growth on an annualised basis. This is compared to a historical growth rate of 27% over the past five years. Compare this to the 301 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 16% per year. So it's pretty clear that, while Zhejiang HangKe Technology's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Zhejiang HangKe Technology. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Zhejiang HangKe Technology analysts - going out to 2026, and you can see them free on our platform here.
Even so, be aware that Zhejiang HangKe Technology is showing 2 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.
