Last week saw the newest annual earnings release from Wangfujing Group Co., Ltd. (SHSE:600859), an important milestone in the company's journey to build a stronger business. Statutory earnings per share of CN¥0.62 unfortunately missed expectations by 14%, although it was encouraging to see revenues of CN¥12b exceed expectations by 2.5%. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, Wangfujing Group's eight analysts are now forecasting revenues of CN¥13.1b in 2024. This would be a modest 7.3% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 24% to CN¥0.77. Before this earnings report, the analysts had been forecasting revenues of CN¥13.9b and earnings per share (EPS) of CN¥0.99 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.
It'll come as no surprise then, to learn that the analysts have cut their price target 19% to CN¥17.40. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Wangfujing Group at CN¥19.00 per share, while the most bearish prices it at CN¥15.80. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Wangfujing Group is an easy business to forecast or the the analysts are all using similar assumptions.
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. For example, we noticed that Wangfujing Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 7.3% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 21% a year 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 revenue grow 13% per year. So although Wangfujing Group's revenue growth is expected to improve, it is still expected to grow slower than the 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.
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 forecasts for Wangfujing Group 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 1 warning sign for Wangfujing Group 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.