Today is shaping up negative for Suzhou Harmontronics Automation Technology Co., Ltd (SHSE:688022) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. The stock price has risen 4.5% to CN¥24.53 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the downgrade, the latest consensus from Suzhou Harmontronics Automation Technology's two analysts is for revenues of CN¥2.0b in 2023, which would reflect a meaningful 19% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 1,130% to CN¥1.15. Before this latest update, the analysts had been forecasting revenues of CN¥2.3b and earnings per share (EPS) of CN¥1.33 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.
See our latest analysis for Suzhou Harmontronics Automation Technology
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Suzhou Harmontronics Automation Technology's revenue growth is expected to slow, with the forecast 19% annualised growth rate until the end of 2023 being well below the historical 29% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 21% annually. So it's pretty clear that, while Suzhou Harmontronics Automation Technology's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
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 Suzhou Harmontronics Automation Technology. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Suzhou Harmontronics Automation Technology, and we wouldn't blame shareholders for feeling a little more cautious themselves.
That said, the analysts might have good reason to be negative on Suzhou Harmontronics Automation Technology, given its declining profit margins. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.