These Analysts Just Made A Huge Downgrade To Their SPT Energy Group Inc. (HKG:1251) EPS Forecasts
The latest analyst coverage could presage a bad day for SPT Energy Group Inc. (HKG:1251), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the latest downgrade, the current consensus, from the five analysts covering SPT Energy Group, is for revenues of CN¥1.7b in 2020, which would reflect a considerable 11% reduction in SPT Energy Group's sales over the past 12 months. Per-share earnings are expected to increase 2.3% to CN¥0.11. Before this latest update, the analysts had been forecasting revenues of CN¥2.6b and earnings per share (EPS) of CN¥0.16 in 2020. Indeed, we can see that the analysts are a lot more bearish about SPT Energy Group's prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.
Check out our latest analysis for SPT Energy Group
The consensus price target fell 7.4% to CN¥0.70, with the weaker earnings outlook clearly leading analyst valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values SPT Energy Group at CN¥1.08 per share, while the most bearish prices it at CN¥0.27. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. We would highlight that sales are expected to reverse, with the forecast 11% revenue decline a notable change from historical growth of 2.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.3% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - SPT Energy Group is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that SPT Energy Group's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of SPT Energy Group.
That said, the analysts might have good reason to be negative on SPT Energy Group, given dilutive stock issuance over the past year. Learn more, and discover the 3 other risks we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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