It's been a mediocre week for Toly Bread Co.,Ltd. (SHSE:603866) shareholders, with the stock dropping 11% to CN¥6.30 in the week since its latest yearly results. Revenues were in line with forecasts, at CN¥6.8b, although statutory earnings per share came in 11% below what the analysts expected, at CN¥0.36 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Toly BreadLtd's eight analysts are now forecasting revenues of CN¥7.19b in 2024. This would be a credible 6.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to rise 5.7% to CN¥0.38. In the lead-up to this report, the analysts had been modelling revenues of CN¥7.59b and earnings per share (EPS) of CN¥0.47 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the CN¥10.83 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Toly BreadLtd analyst has a price target of CN¥14.00 per share, while the most pessimistic values it at CN¥7.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 6.3% growth on an annualised basis. That is in line with its 6.2% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 13% annually. So it's pretty clear that Toly BreadLtd is expected to grow slower than similar companies in the same industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Toly BreadLtd. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Toly BreadLtd analysts - going out to 2025, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Toly BreadLtd that you should be aware of.
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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.