Jiangsu Yangnong Chemical Co., Ltd. (SHSE:600486) Just Recorded An Earnings Miss And Analysts Are Updating Their Numbers

It's shaping up to be a tough period for Jiangsu Yangnong Chemical Co., Ltd. (SHSE:600486), which a week ago released some disappointing second-quarter 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¥2.5b) coming in 43% below what they had expected. Statutory earnings per share of CN¥0.82 fell 44% 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Jiangsu Yangnong Chemical

Taking into account the latest results, the current consensus from Jiangsu Yangnong Chemical's twelve analysts is for revenues of CN¥12.9b in 2024. This would reflect a major 27% increase on its revenue over the past 12 months. Per-share earnings are expected to step up 18% to CN¥3.48. In the lead-up to this report, the analysts had been modelling revenues of CN¥13.5b and earnings per share (EPS) of CN¥4.07 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.

The consensus price target fell 9.2% to CN¥68.61, with the weaker earnings outlook clearly leading valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Jiangsu Yangnong Chemical analyst has a price target of CN¥82.00 per share, while the most pessimistic values it at CN¥52.36. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. The analysts are definitely expecting Jiangsu Yangnong Chemical's growth to accelerate, with the forecast 62% annualised growth to the end of 2024 ranking favourably alongside historical growth of 7.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Jiangsu Yangnong Chemical is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Jiangsu Yangnong Chemical's future valuation.

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 forecasts for Jiangsu Yangnong Chemical going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Jiangsu Yangnong Chemical that you need to be mindful 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.