The latest analyst coverage could presage a bad day for Ten Pao Group Holdings Limited (HKG:1979), with the covering analyst 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 analyst has soured majorly on the business. Bidders are definitely seeing a different story, with the stock price of HK$1.44 reflecting a 14% rise in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

After this downgrade, Ten Pao Group Holdings' one analyst is now forecasting revenues of HK$6.2b in 2022. This would be an okay 3.0% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 2.6% to HK$0.32. Previously, the analyst had been modelling revenues of HK$7.4b and earnings per share (EPS) of HK$0.45 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Ten Pao Group Holdings

The consensus price target fell 35% to HK$2.50, with the weaker earnings outlook clearly leading analyst valuation estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Ten Pao Group Holdings' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Ten Pao Group Holdings' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 3.0% growth on an annualised basis. This is compared to a historical growth rate of 18% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that Ten Pao Group Holdings is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of Ten Pao Group Holdings.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Ten Pao Group Holdings going out as far as 2024, 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.

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