Shareholders might have noticed that Guangshen Railway Company Limited (HKG:525) filed its annual result this time last week. The early response was not positive, with shares down 2.2% to HK$1.77 in the past week. It was an okay report, and revenues came in at CN¥26b, approximately in line with analyst estimates leading up to the results announcement. 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. 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 most recent consensus for Guangshen Railway from five analysts is for revenues of CN¥27.5b in 2024. If met, it would imply a reasonable 5.1% increase on its revenue over the past 12 months. Per-share earnings are expected to climb 17% to CN¥0.18. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥27.5b and earnings per share (EPS) of CN¥0.18 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

The consensus price target held steady at HK$2.66, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Guangshen Railway analyst has a price target of HK$2.98 per share, while the most pessimistic values it at HK$2.50. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. The analysts are definitely expecting Guangshen Railway's growth to accelerate, with the forecast 5.1% annualised growth to the end of 2024 ranking favourably alongside historical growth of 3.6% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 5.5% per year. Guangshen Railway is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at HK$2.66, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Guangshen Railway going out to 2026, and you can see them free on our platform here.

It might also be worth considering whether Guangshen Railway's debt load is appropriate, using our debt analysis tools on the Simply Wall St 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.