A week ago, Baoshan Iron & Steel Co., Ltd. (SHSE:600019) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 4.1% to hit CN¥81b. Baoshan Iron & Steel also reported a statutory profit of CN¥0.09, which was an impressive 29% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, Baoshan Iron & Steel's 18 analysts currently expect revenues in 2024 to be CN¥350.5b, approximately in line with the last 12 months. Per-share earnings are expected to increase 6.6% to CN¥0.59. In the lead-up to this report, the analysts had been modelling revenues of CN¥354.5b and earnings per share (EPS) of CN¥0.60 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of CN¥7.77, suggesting that the company has met expectations in its recent result. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Baoshan Iron & Steel at CN¥9.05 per share, while the most bearish prices it at CN¥6.00. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Baoshan Iron & Steel's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.6% growth on an annualised basis. This is compared to a historical growth rate of 5.3% 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 10% annually. Factoring in the forecast slowdown in growth, it seems obvious that Baoshan Iron & Steel is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Baoshan Iron & Steel's revenue is expected to perform worse than the wider industry. The consensus price target held steady at CN¥7.77, with the latest estimates not enough to have an impact on their price targets.
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. We have estimates - from multiple Baoshan Iron & Steel analysts - going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Baoshan Iron & Steel 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.