One thing we could say about the analysts on Sichuan Development Lomon Co., Ltd. (SZSE:002312) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
After the downgrade, the twin analysts covering Sichuan Development Lomon are now predicting revenues of CN¥8.8b in 2023. If met, this would reflect a meaningful 11% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 194% to CN¥0.44. Previously, the analysts had been modelling revenues of CN¥10.0b and earnings per share (EPS) of CN¥0.55 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.
See our latest analysis for Sichuan Development Lomon
The consensus price target fell 12% to CN¥10.80, with the weaker earnings outlook clearly leading analyst valuation estimates.
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 would highlight that Sichuan Development Lomon's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2023 being well below the historical 39% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 20% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Sichuan Development Lomon.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Sichuan Development Lomon. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Sichuan Development Lomon's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Sichuan Development Lomon.
There might be good reason for analyst bearishness towards Sichuan Development Lomon, like the risk of cutting its dividend. Learn more, and discover the 2 other warning signs we've identified, for 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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