Today is shaping up negative for Miracle Automation Engineering Co.Ltd (SZSE:002009) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. Shares are up 9.4% to CN¥15.65 in the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.
Following this downgrade, Miracle Automation EngineeringLtd's twin analysts are forecasting 2023 revenues to be CN¥3.9b, approximately in line with the last 12 months. The loss per share is expected to ameliorate slightly, reducing to CN¥0.82. Previously, the analysts had been modelling revenues of CN¥5.5b and earnings per share (EPS) of CN¥1.08 in 2023. So we can see that the consensus has become notably more bearish on Miracle Automation EngineeringLtd's outlook with these numbers, making a pretty serious reduction to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.
Check out our latest analysis for Miracle Automation EngineeringLtd
The consensus price target fell 5.6% to CN¥17.00, implicitly signalling that lower earnings per share are a leading indicator for Miracle Automation EngineeringLtd's valuation.
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 Miracle Automation EngineeringLtd's revenue growth is expected to slow, with the forecast 0.9% annualised growth rate until the end of 2023 being well below the historical 5.9% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 21% per year. Factoring in the forecast slowdown in growth, it seems obvious that Miracle Automation EngineeringLtd is also expected to grow slower than other industry participants.
The Bottom Line
The biggest low-light for us was that the forecasts for Miracle Automation EngineeringLtd dropped from profits to a loss this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Miracle Automation EngineeringLtd.
That said, the analysts might have good reason to be negative on Miracle Automation EngineeringLtd, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other warning signs we've identified.
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