The latest analyst coverage could presage a bad day for Anhui Golden Seed Winery Co., Ltd. (SHSE:600199), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the current consensus from Anhui Golden Seed Winery's five analysts is for revenues of CN¥1.7b in 2024 which - if met - would reflect a decent 15% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 169% to CN¥0.15. Before this latest update, the analysts had been forecasting revenues of CN¥2.0b and earnings per share (EPS) of CN¥0.24 in 2024. Indeed, we can see that the analysts are a lot more bearish about Anhui Golden Seed Winery's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Anhui Golden Seed Winery's growth to accelerate, with the forecast 15% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.7% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 12% per year. Anhui Golden Seed Winery 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 analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Anhui Golden Seed Winery, and a few readers might choose to steer clear of the stock.

In light of the downgrade, our automated discounted cash flow valuation tool suggests that Anhui Golden Seed Winery could now be moderately overvalued. Find out why, and see how we estimate the valuation for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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