The analysts covering Dajin Heavy Industry Co.,Ltd. (SZSE:002487) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Surprisingly the share price has been buoyant, rising 10% to CN¥21.03 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
After this downgrade, Dajin Heavy IndustryLtd's four analysts are now forecasting revenues of CN¥6.2b in 2024. This would be a huge 58% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 82% to CN¥1.15. Before this latest update, the analysts had been forecasting revenues of CN¥8.8b and earnings per share (EPS) of CN¥1.65 in 2024. Indeed, we can see that the analysts are a lot more bearish about Dajin Heavy IndustryLtd's prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.
It'll come as no surprise then, to learn that the analysts have cut their price target 21% to CN¥20.80.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Dajin Heavy IndustryLtd's past performance and to peers in the same industry. It's clear from the latest estimates that Dajin Heavy IndustryLtd's rate of growth is expected to accelerate meaningfully, with the forecast 58% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 23% 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 18% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Dajin Heavy IndustryLtd is expected to grow much faster than its 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Dajin Heavy IndustryLtd.
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 Dajin Heavy IndustryLtd going out to 2026, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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.