Today is shaping up negative for China Film Co., Ltd. (SHSE:600977) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

After the downgrade, the six analysts covering China Film are now predicting revenues of CN¥5.9b in 2024. If met, this would reflect a decent 9.7% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 177% to CN¥0.39. Previously, the analysts had been modelling revenues of CN¥6.9b and earnings per share (EPS) of CN¥0.51 in 2024. Indeed, we can see that the analysts are a lot more bearish about China Film's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Despite the cuts to forecast earnings, there was no real change to the CN¥12.03 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

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. One thing stands out from these estimates, which is that China Film is forecast to grow faster in the future than it has in the past, with revenues expected to display 9.7% annualised growth until the end of 2024. If achieved, this would be a much better result than the 18% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 15% per year. So although China Film's revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that China Film's revenues are expected to grow slower 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 China Film.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple China Film analysts - going out to 2026, and you can see them free on our platform here.

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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.