It's shaping up to be a tough period for Sichuan Road & Bridge Group Co.,Ltd (SHSE:600039), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (CN¥115b) coming in 23% below what they had expected. Statutory earnings per share of CN¥1.04 fell 40% short. 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.
Following the latest results, Sichuan Road & Bridge GroupLtd's two analysts are now forecasting revenues of CN¥126.3b in 2024. This would be a solid 9.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 153% to CN¥2.61. Before this earnings report, the analysts had been forecasting revenues of CN¥168.1b and earnings per share (EPS) of CN¥2.02 in 2024. So there's been quite a change-up of views after the latest results, with the analysts making a serious cut to their revenue forecasts while also granting a sizeable expansion in to the earnings per share numbers.
The analysts have cut their price target 41% to CN¥8.41per share, suggesting that the declining revenue was a more crucial indicator than the expected improvement in earnings.
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. It's pretty clear that there is an expectation that Sichuan Road & Bridge GroupLtd's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 9.8% growth on an annualised basis. This is compared to a historical growth rate of 27% over the past five years. Compare this to the 107 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 10% per year. So it's pretty clear that, while Sichuan Road & Bridge GroupLtd's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Sichuan Road & Bridge GroupLtd's earnings potential next year. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Still, earnings 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Sichuan Road & Bridge GroupLtd. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.
You should always think about risks though. Case in point, we've spotted 3 warning signs for Sichuan Road & Bridge GroupLtd you should be aware of, and 2 of them don't sit too well with us.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.