Zhuhai CosMX Battery Co., Ltd. (SHSE:688772) missed earnings with its latest yearly results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥11b, statutory earnings missed forecasts by an incredible 20%, coming in at just CN¥0.30 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the seven analysts covering Zhuhai CosMX Battery are now predicting revenues of CN¥13.6b in 2024. If met, this would reflect a meaningful 19% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 161% to CN¥0.80. Before this earnings report, the analysts had been forecasting revenues of CN¥12.8b and earnings per share (EPS) of CN¥0.83 in 2024. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a meaningful to revenue, the consensus also made a small dip in its earnings per share forecasts.
The consensus price target fell 16% to CN¥21.00, suggesting that the analysts are primarily focused on earnings as the driver of value for this business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Zhuhai CosMX Battery analyst has a price target of CN¥22.00 per share, while the most pessimistic values it at CN¥19.00. This is a very narrow spread of estimates, implying either that Zhuhai CosMX Battery is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Zhuhai CosMX Battery's past performance and to peers in the same industry. The analysts are definitely expecting Zhuhai CosMX Battery's growth to accelerate, with the forecast 19% annualised growth to the end of 2024 ranking favourably alongside historical growth of 15% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 18% annually. Zhuhai CosMX Battery is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also upgraded their revenue forecasts, although the latest estimates suggest that Zhuhai CosMX Battery will grow in line with the overall industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Zhuhai CosMX Battery going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Zhuhai CosMX Battery .
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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.