Shareholders of Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (HKG:520) will be pleased this week, given that the stock price is up 13% to HK$3.75 following its latest interim results. It was a pretty bad result overall; while revenues were in line with expectations at CN¥2.2b, statutory losses exploded to CN¥0.26 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Xiabuxiabu Catering Management (China) Holdings

Taking into account the latest results, the most recent consensus for Xiabuxiabu Catering Management (China) Holdings from eleven analysts is for revenues of CN¥5.68b in 2022 which, if met, would be a modest 7.8% increase on its sales over the past 12 months. Earnings are expected to improve, with Xiabuxiabu Catering Management (China) Holdings forecast to report a statutory profit of CN¥0.0099 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥6.52b and earnings per share (EPS) of CN¥0.11 in 2022. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a large cut to earnings per share numbers as well.

Despite the cuts to forecast earnings, there was no real change to the HK$4.22 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. The most optimistic Xiabuxiabu Catering Management (China) Holdings analyst has a price target of HK$5.45 per share, while the most pessimistic values it at HK$3.11. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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 clear from the latest estimates that Xiabuxiabu Catering Management (China) Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 16% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 11% 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 29% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Xiabuxiabu Catering Management (China) Holdings is expected to grow slower 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Xiabuxiabu Catering Management (China) Holdings going out to 2024, and you can see them free on our platform here..

We also provide an overview of the Xiabuxiabu Catering Management (China) Holdings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.