It's been a pretty great week for Petpal Pet Nutrition Technology Co., Ltd. (SZSE:300673) shareholders, with its shares surging 13% to CN¥13.76 in the week since its latest first-quarter results. Revenues were CN¥384m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at CN¥0.17, an impressive 113% ahead of estimates. 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 Petpal Pet Nutrition Technology's eleven analysts is for revenues of CN¥1.90b in 2024. This would reflect a meaningful 16% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 94% to CN¥0.54. In the lead-up to this report, the analysts had been modelling revenues of CN¥1.97b and earnings per share (EPS) of CN¥0.53 in 2024. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

The average price target increased 7.7% to CN¥15.83, with the analysts signalling that the improved earnings outlook is more important to the company's valuation than its revenue. 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 Petpal Pet Nutrition Technology at CN¥18.30 per share, while the most bearish prices it at CN¥13.50. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Petpal Pet Nutrition Technology's rate of growth is expected to accelerate meaningfully, with the forecast 22% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 9.9% p.a. 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 13% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Petpal Pet Nutrition Technology is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Petpal Pet Nutrition Technology's earnings potential next year. They also downgraded Petpal Pet Nutrition Technology's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Petpal Pet Nutrition Technology. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Petpal Pet Nutrition Technology going out to 2026, and you can see them free on our platform here..

You can also view our analysis of Petpal Pet Nutrition Technology's balance sheet, and whether we think Petpal Pet Nutrition Technology is carrying too much debt, for 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.