The analysts might have been a bit too bullish on Angel Yeast Co., Ltd (SHSE:600298), given that the company fell short of expectations when it released its quarterly results last week. Angel Yeast missed earnings this time around, with CN¥3.5b revenue coming in 8.2% below what the analysts had modelled. Statutory earnings per share (EPS) of CN¥0.37 also fell short of expectations by 20%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the 16 analysts covering Angel Yeast are now predicting revenues of CN¥15.2b in 2024. If met, this would reflect a solid 11% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to rise 6.6% to CN¥1.54. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥15.5b and earnings per share (EPS) of CN¥1.57 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 6.8% to CN¥35.60, with the analysts clearly linking lower forecast earnings to the performance of the stock price. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Angel Yeast, with the most bullish analyst valuing it at CN¥48.00 and the most bearish at CN¥23.80 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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. We can infer from the latest estimates that forecasts expect a continuation of Angel Yeast'shistorical trends, as the 15% annualised revenue growth to the end of 2024 is roughly in line with the 15% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 13% annually. So although Angel Yeast is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Angel Yeast. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Angel Yeast's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Angel Yeast. Long-term earnings power is much more important than next year's profits. We have forecasts for Angel Yeast going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Angel Yeast (of which 1 is significant!) you should know about.
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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.