Jiangsu Yangnong Chemical Co., Ltd. (SHSE:600486) just released its latest first-quarter report and things are not looking great. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (CN¥3.2b) coming in 37% below what they had expected. Statutory earnings per share of CN¥1.06 fell 37% short. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Jiangsu Yangnong Chemical's twelve analysts are now forecasting revenues of CN¥14.6b in 2024. This would be a major 43% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 20% to CN¥3.67. Before this earnings report, the analysts had been forecasting revenues of CN¥14.5b and earnings per share (EPS) of CN¥4.33 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.
It might be a surprise to learn that the consensus price target fell 10% to CN¥77.84, with the analysts clearly linking lower forecast earnings to the performance of the stock price. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Jiangsu Yangnong Chemical analyst has a price target of CN¥92.31 per share, while the most pessimistic values it at CN¥64.79. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Jiangsu Yangnong Chemical's growth to accelerate, with the forecast 62% annualised growth to the end of 2024 ranking favourably alongside historical growth of 9.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Jiangsu Yangnong Chemical is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Jiangsu Yangnong Chemical. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is 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.
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. At Simply Wall St, we have a full range of analyst estimates for Jiangsu Yangnong Chemical going out to 2026, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for Jiangsu Yangnong Chemical that you need to take into consideration.
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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.