Earnings Miss: Xiabuxiabu Catering Management (China) Holdings Co., Ltd. Missed EPS By 11% And Analysts Are Revising Their Forecasts
It's been a sad week for Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (HKG:520), who've watched their investment drop 10% to HK$5.71 in the week since the company reported its annual result. It was not a great result overall. While revenues of CN¥6.0b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 11% to hit CN¥0.27 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Xiabuxiabu Catering Management (China) Holdings
Taking into account the latest results, the most recent consensus for Xiabuxiabu Catering Management (China) Holdings from 15 analysts is for revenues of CN¥6.24b in 2020 which, if met, would be a modest 3.5% increase on its sales over the past 12 months. Statutory earnings per share are forecast to dive 35% to CN¥0.18 in the same period. Before this earnings report, the analysts had been forecasting revenues of CN¥6.86b and earnings per share (EPS) of CN¥0.36 in 2020. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.
The analysts made no major changes to their price target of CN¥9.47, suggesting the downgrades are not expected to have a long-term impact on Xiabuxiabu Catering Management (China) Holdings'valuation. 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 Xiabuxiabu Catering Management (China) Holdings analyst has a price target of CN¥15.05 per share, while the most pessimistic values it at CN¥5.42. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Xiabuxiabu Catering Management (China) Holdings' past performance and to peers in the same industry. We would highlight that Xiabuxiabu Catering Management (China) Holdings' revenue growth is expected to slow, with forecast 3.5% increase next year well below the historical 22%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Xiabuxiabu Catering Management (China) Holdings.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Xiabuxiabu Catering Management (China) Holdings. 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 Xiabuxiabu Catering Management (China) Holdings going out to 2022, and you can see them free on our platform here..
You still need to take note of risks, for example - Xiabuxiabu Catering Management (China) Holdings has 2 warning signs we think you should be aware of.
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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