It's shaping up to be a tough period for Wuxi Lead Intelligent Equipment CO.,LTD. (SZSE:300450), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. It looks like a weak result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥3.3b missed by 14%, and statutory earnings per share of CN¥0.36 fell short of forecasts by 9.7%. 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 15 analysts covering Wuxi Lead Intelligent EquipmentLTD are now predicting revenues of CN¥18.3b in 2024. If met, this would reflect a decent 9.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 94% to CN¥2.21. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥22.9b and earnings per share (EPS) of CN¥2.60 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a pretty serious reduction to revenue estimates and a substantial drop in earnings per share numbers as well.
It'll come as no surprise then, to learn that the analysts have cut their price target 6.2% to CN¥32.86. 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. Currently, the most bullish analyst values Wuxi Lead Intelligent EquipmentLTD at CN¥59.00 per share, while the most bearish prices it at CN¥16.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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. It's pretty clear that there is an expectation that Wuxi Lead Intelligent EquipmentLTD's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 13% growth on an annualised basis. This is compared to a historical growth rate of 32% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 18% annually. Factoring in the forecast slowdown in growth, it seems obvious that Wuxi Lead Intelligent EquipmentLTD is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Wuxi Lead Intelligent EquipmentLTD. 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. At Simply Wall St, we have a full range of analyst estimates for Wuxi Lead Intelligent EquipmentLTD going out to 2026, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 3 warning signs for Wuxi Lead Intelligent EquipmentLTD (1 is a bit unpleasant!) 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.