As you might know, XCMG Construction Machinery Co., Ltd. (SZSE:000425) last week released its latest quarterly, and things did not turn out so great for shareholders. Earnings fell badly short of analyst estimates, with CN¥25b revenues missing by 10%, and statutory earnings per share (EPS) of CN¥0.17 falling short of forecasts by some -19%. 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.
Taking into account the latest results, the current consensus from XCMG Construction Machinery's nine analysts is for revenues of CN¥98.3b in 2024. This would reflect a modest 7.8% increase on its revenue over the past 12 months. Per-share earnings are expected to ascend 20% to CN¥0.55. In the lead-up to this report, the analysts had been modelling revenues of CN¥101.0b and earnings per share (EPS) of CN¥0.56 in 2024. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
The average price target was steady at CN¥7.40even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on XCMG Construction Machinery, with the most bullish analyst valuing it at CN¥8.44 and the most bearish at CN¥5.10 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.
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. It's clear from the latest estimates that XCMG Construction Machinery's rate of growth is expected to accelerate meaningfully, with the forecast 16% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 10% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 16% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that XCMG Construction Machinery is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. 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. With that said, earnings are more important to the long-term value of the business. The consensus price target held steady at CN¥7.40, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on XCMG Construction Machinery. Long-term earnings power is much more important than next year's profits. We have forecasts for XCMG Construction Machinery going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with XCMG Construction Machinery .
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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.