It's been a good week for China Yuchai International Limited (NYSE:CYD) shareholders, because the company has just released its latest yearly results, and the shares gained 7.6% to US$9.97. Results overall were not great, with earnings of CN¥14.53 per share falling drastically short of analyst expectations. Meanwhile revenues hit CN¥18b and were slightly better than forecasts. 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.
Following the recent earnings report, the consensus from dual analysts covering China Yuchai International is for revenues of CN¥15.8b in 2020, implying a considerable 12% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to dive 24% to CN¥11.19 in the same period. Before this earnings report, the analysts had been forecasting revenues of CN¥17.6b and earnings per share (EPS) of CN¥21.69 in 2020. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a large cut to earnings per share numbers as well.
It'll come as no surprise then, to learn thatthe analysts have cut their price target 5.8% to US$20.40.
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. We would highlight that sales are expected to reverse, with the forecast 12% revenue decline a notable change from historical growth of 3.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 1.0% annually for the foreseeable future. It's pretty clear that China Yuchai International's revenues are expected to perform substantially worse than the wider 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse 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 China Yuchai International's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
Before you take the next step you should know about the 1 warning sign for China Yuchai International that we have uncovered.
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