One thing we could say about the analysts on Wangneng Environment Co.,Ltd (SZSE:002034) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. At CN¥14.42, shares are up 4.9% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the current consensus from Wangneng EnvironmentLtd's four analysts is for revenues of CN¥3.3b in 2024 which - if met - would reflect a credible 6.5% increase on its sales over the past 12 months. Per-share earnings are expected to grow 15% to CN¥1.66. Prior to this update, the analysts had been forecasting revenues of CN¥4.4b and earnings per share (EPS) of CN¥2.21 in 2024. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

The consensus price target fell 15% to CN¥17.65, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. We would highlight that Wangneng EnvironmentLtd's revenue growth is expected to slow, with the forecast 8.7% annualised growth rate until the end of 2024 being well below the historical 25% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 20% annually. Factoring in the forecast slowdown in growth, it seems obvious that Wangneng EnvironmentLtd is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Wangneng EnvironmentLtd's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Wangneng EnvironmentLtd.

Worse, Wangneng EnvironmentLtd is labouring under a substantial debt burden, which - if today's forecasts prove accurate - the forecast downgrade could potentially exacerbate. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.

You can also see our analysis of Wangneng EnvironmentLtd's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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