Today is shaping up negative for Pacific Textiles Holdings Limited (HKG:1382) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the downgrade, the most recent consensus for Pacific Textiles Holdings from its four analysts is for revenues of HK$4.9b in 2024 which, if met, would be a meaningful 8.5% increase on its sales over the past 12 months. Statutory earnings per share are presumed to leap 90% to HK$0.20. Prior to this update, the analysts had been forecasting revenues of HK$5.6b and earnings per share (EPS) of HK$0.31 in 2024. Indeed, we can see that the analysts are a lot more bearish about Pacific Textiles Holdings' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
Check out our latest analysis for Pacific Textiles Holdings
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Pacific Textiles Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 8.5% annualised growth until the end of 2024. If achieved, this would be a much better result than the 3.5% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 11% annually for the foreseeable future. Although Pacific Textiles Holdings' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader 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 Pacific Textiles Holdings. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Pacific Textiles Holdings' revenues are expected to grow slower than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Pacific Textiles Holdings, and their negativity could be grounds for caution.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Pacific Textiles Holdings' business, like its declining profit margins. For more information, you can click here to discover this and the 2 other warning signs we've identified.
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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