Yahoo Finance Analyst Estimates: Here's What Brokers Think Of Weichai Power Co., Ltd. (HKG:2338) After Its Annual Report
It's been a good week for Weichai Power Co., Ltd. (HKG:2338) shareholders, because the company has just released its latest full-year results, and the shares gained 3.5% to HK$12.88. The results don't look great, especially considering that statutory losses grew 100% to per share. Revenues of CN¥174b did beat expectations by 8.4%, but it looks like a bit of a cold comfort. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for Weichai Power
Taking into account the latest results, Weichai Power's 14 analysts currently expect revenues in 2020 to be CN¥176.5b, approximately in line with the last 12 months. Statutory per share are forecast to be CN¥1.13, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of CN¥182.0b and earnings per share (EPS) of CN¥1.28 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the CN¥15.48 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. Currently, the most bullish analyst values Weichai Power at CN¥19.05 per share, while the most bearish prices it at CN¥11.68. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Weichai Power's revenue growth will slow down substantially, with revenues next year expected to grow 1.2%, compared to a historical growth rate of 20% 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 11% next year. Factoring in the forecast slowdown in growth, it seems obvious that Weichai Power 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 Weichai Power. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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. At Simply Wall St, we have a full range of analyst estimates for Weichai Power going out to 2022, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for Weichai Power you should know about.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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