Last week, you might have seen that China Water Affairs Group Limited (HKG:855) released its yearly result to the market. The early response was not positive, with shares down 4.2% to HK$7.30 in the past week. China Water Affairs Group beat revenue expectations by 7.4%, recording sales of HK$13b. Statutory earnings per share (EPS) came in at HK$1.16, some 7.0% short of analyst estimates. 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 China Water Affairs Group

Taking into account the latest results, the most recent consensus for China Water Affairs Group from five analysts is for revenues of HK$14.7b in 2023 which, if met, would be a notable 13% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 21% to HK$1.41. Yet prior to the latest earnings, the analysts had been anticipated revenues of HK$13.0b and earnings per share (EPS) of HK$1.39 in 2023. It seems sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

Even though revenue forecasts increased, there was no change to the consensus price target of HK$11.13, suggesting the analysts are focused on earnings as the driver of value creation. 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. There are some variant perceptions on China Water Affairs Group, with the most bullish analyst valuing it at HK$12.00 and the most bearish at HK$10.40 per share. This is a very narrow spread of estimates, implying either that China Water Affairs Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of China Water Affairs Group'shistorical trends, as the 13% annualised revenue growth to the end of 2023 is roughly in line with the 14% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 9.7% per year. So it's pretty clear that China Water Affairs Group is forecast to grow substantially faster than its industry.

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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at HK$11.13, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple China Water Affairs Group analysts - going out to 2025, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for China Water Affairs Group you should be aware of, and 1 of them is a bit concerning.

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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.