CRRC Corporation Limited (SHSE:601766) last week reported its latest half-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at CN¥51b, statutory earnings beat expectations by a notable 18%, coming in at CN¥0.10 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for CRRC

Taking into account the latest results, the current consensus from CRRC's ten analysts is for revenues of CN¥222.6b in 2022, which would reflect a satisfactory 5.2% increase on its sales over the past 12 months. Per-share earnings are expected to accumulate 5.5% to CN¥0.35. In the lead-up to this report, the analysts had been modelling revenues of CN¥227.7b and earnings per share (EPS) of CN¥0.35 in 2022. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The average price target was steady at CN¥5.94even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. 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. Currently, the most bullish analyst values CRRC at CN¥7.41 per share, while the most bearish prices it at CN¥4.30. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the CRRC's past performance and to peers in the same industry. The analysts are definitely expecting CRRC's growth to accelerate, with the forecast 11% annualised growth to the end of 2022 ranking favourably alongside historical growth of 0.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 20% annually. So it's clear that despite the acceleration in growth, CRRC is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, long term profitability is more important for the value creation process. The consensus price target held steady at CN¥5.94, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple CRRC analysts - going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for CRRC that you should be aware of.

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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.