The latest analyst coverage could presage a bad day for Shanghai Emperor of Cleaning Hi-Tech Co., Ltd (SHSE:603200), 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.
Following the downgrade, the latest consensus from Shanghai Emperor of Cleaning Hi-Tech's single analyst is for revenues of CN¥558m in 2023, which would reflect a meaningful 8.1% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 215% to CN¥0.49. Before this latest update, the analyst had been forecasting revenues of CN¥779m and earnings per share (EPS) of CN¥0.59 in 2023. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a considerable drop in earnings per share numbers as well.
See our latest analysis for Shanghai Emperor of Cleaning Hi-Tech
The consensus price target fell 16% to CN¥27.00, with the weaker earnings outlook clearly leading analyst valuation estimates.
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 analyst is definitely expecting Shanghai Emperor of Cleaning Hi-Tech's growth to accelerate, with the forecast 8.1% annualised growth to the end of 2023 ranking favourably alongside historical growth of 4.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 22% annually. So it's clear that despite the acceleration in growth, Shanghai Emperor of Cleaning Hi-Tech is expected to grow meaningfully slower than the industry average.
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 Shanghai Emperor of Cleaning Hi-Tech.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2025, which can be seen 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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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.