The latest analyst coverage could presage a bad day for GF Securities Co., Ltd. (SZSE:000776), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. 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.
After this downgrade, GF Securities' ten analysts are now forecasting revenues of CN¥24b in 2024. This would be a credible 3.9% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 3.3% to CN¥0.95. Before this latest update, the analysts had been forecasting revenues of CN¥29b and earnings per share (EPS) of CN¥1.19 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
Analysts made no major changes to their price target of CN¥16.76, suggesting the downgrades are not expected to have a long-term impact on GF Securities' valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the GF Securities' past performance and to peers in the same industry. It's pretty clear that there is an expectation that GF Securities' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.9% growth on an annualised basis. This is compared to a historical growth rate of 6.1% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than GF Securities.
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 GF Securities. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that GF Securities' revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on GF Securities after the downgrade.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple GF Securities analysts - going out to 2026, and you can see them 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.
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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.