As you might know, Yangzijiang Shipbuilding (Holdings) Ltd. (SGX:BS6) last week released its latest third-quarter, and things did not turn out so great for shareholders. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥5.4b, earnings missed forecasts by 10%, coming in at just CN¥0.18 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest forecasts to see whether analysts have changed their mind on Yangzijiang Shipbuilding (Holdings) after the latest results.
After the latest results, the consensus from Yangzijiang Shipbuilding (Holdings)'s eleven analysts is for revenues of CN¥23.1b in 2020, which would reflect a perceptible 2.6% decline in sales compared to the last year of performance. Earnings per share are expected to plunge 20% to CN¥0.75 in the same period. In the lead-up to this report, analysts had been modelling revenues of CN¥23.6b and earnings per share (EPS) of CN¥0.76 in 2020. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
The average price target was steady at CN¥7.01 even though revenue estimates declined; likely suggesting analysts place a higher value on earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Yangzijiang Shipbuilding (Holdings) analyst has a price target of CN¥8.66 per share, while the most pessimistic values it at CN¥4.59. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.6% a significant reduction from annual growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 2.3% annually for the foreseeable future. It's pretty clear that Yangzijiang Shipbuilding (Holdings)'s revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at CN¥7.01, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Yangzijiang Shipbuilding (Holdings) going out to 2021, and you can see them free on our platform here.
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