Zhe Jiang Taihua New Material Co., Ltd. (SHSE:603055) shareholders are probably feeling a little disappointed, since its shares fell 9.6% to CN¥9.20 in the week after its latest yearly results. It was a credible result overall, with revenues of CN¥4.3b and statutory earnings per share of CN¥0.54 both in line with analyst estimates, showing that Zhe Jiang Taihua New Material is executing in line with expectations. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Zhe Jiang Taihua New Material

Taking into account the latest results, the current consensus from Zhe Jiang Taihua New Material's four analysts is for revenues of CN¥5.11b in 2022, which would reflect a decent 20% increase on its sales over the past 12 months. Statutory earnings per share are predicted to soar 22% to CN¥0.69. In the lead-up to this report, the analysts had been modelling revenues of CN¥5.15b and earnings per share (EPS) of CN¥0.70 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The consensus price target fell 21% to CN¥14.11, suggesting that the analysts might have been a bit enthusiastic in their previous valuation - or they were expecting the company to provide stronger guidance in the annual results.

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 Zhe Jiang Taihua New Material's growth to accelerate, with the forecast 20% annualised growth to the end of 2022 ranking favourably alongside historical growth of 6.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 18% annually. Zhe Jiang Taihua New Material 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 there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Zhe Jiang Taihua New Material's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Zhe Jiang Taihua New Material. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Zhe Jiang Taihua New Material 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 Zhe Jiang Taihua New Material 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.