Investors in Milkyway Chemical Supply Chain Service Co.,Ltd (SHSE:603713) had a good week, as its shares rose 8.0% to close at CN¥56.66 following the release of its quarterly results. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥2.9b, statutory earnings were in line with expectations, at CN¥2.54 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Milkyway Chemical Supply Chain ServiceLtd's seven analysts is for revenues of CN¥12.5b in 2024. This would reflect a huge 21% increase on its revenue over the past 12 months. Per-share earnings are expected to leap 51% to CN¥4.38. In the lead-up to this report, the analysts had been modelling revenues of CN¥12.6b and earnings per share (EPS) of CN¥4.59 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
It might be a surprise to learn that the consensus price target fell 8.8% to CN¥80.08, with the analysts clearly linking lower forecast earnings to the performance of the stock price. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Milkyway Chemical Supply Chain ServiceLtd, with the most bullish analyst valuing it at CN¥99.12 and the most bearish at CN¥63.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 29% growth on an annualised basis. That is in line with its 33% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 11% per year. So it's pretty clear that Milkyway Chemical Supply Chain ServiceLtd is forecast to grow substantially faster than its industry.
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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Milkyway Chemical Supply Chain ServiceLtd. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Milkyway Chemical Supply Chain ServiceLtd analysts - going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Milkyway Chemical Supply Chain ServiceLtd (1 is a bit concerning) 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.