Jiangsu Hengli Hydraulic Co.,Ltd (SHSE:601100) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. Unfortunately, Jiangsu Hengli HydraulicLtd delivered a serious earnings miss. Revenues of CN¥2.4b were 19% below expectations, and statutory earnings per share of CN¥0.45 missed estimates by 57%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the 23 analysts covering Jiangsu Hengli HydraulicLtd are now predicting revenues of CN¥9.75b in 2024. If met, this would reflect a meaningful 9.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to rise 8.3% to CN¥2.00. In the lead-up to this report, the analysts had been modelling revenues of CN¥10.2b and earnings per share (EPS) of CN¥2.12 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
The analysts made no major changes to their price target of CN¥60.10, suggesting the downgrades are not expected to have a long-term impact on Jiangsu Hengli HydraulicLtd's valuation. 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 Jiangsu Hengli HydraulicLtd analyst has a price target of CN¥82.22 per share, while the most pessimistic values it at CN¥42.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Jiangsu Hengli HydraulicLtd'shistorical trends, as the 13% annualised revenue growth to the end of 2024 is roughly in line with the 11% 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 17% per year. So although Jiangsu Hengli HydraulicLtd is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider 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. The consensus price target held steady at CN¥60.10, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Jiangsu Hengli HydraulicLtd. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Jiangsu Hengli HydraulicLtd analysts - going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Jiangsu Hengli HydraulicLtd (1 is a bit concerning!) that 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.