Market forces rained on the parade of Tiangong International Company Limited (HKG:826) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
After the downgrade, the two analysts covering Tiangong International are now predicting revenues of CN¥5.3b in 2024. If met, this would reflect a reasonable 2.8% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 8.5% to CN¥0.13. Before this latest update, the analysts had been forecasting revenues of CN¥6.5b and earnings per share (EPS) of CN¥0.23 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.
View our latest analysis for Tiangong International
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Tiangong International's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 2.8% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 0.9% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 7.5% annually for the foreseeable future. So although Tiangong International's revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Tiangong International. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Tiangong International's revenues are expected to grow slower than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Tiangong International, and we wouldn't blame shareholders for feeling a little more cautious themselves.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.
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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.