It's shaping up to be a tough period for Chow Tai Fook Jewellery Group Limited (HKG:1929), which a week ago released some disappointing half-yearly results that could have a notable impact on how the market views the stock. Results showed a clear earnings miss, with HK$30b revenue coming in 2.4% lower than what analysts expected. Earnings per share (EPS) of HK$0.15 missed the mark badly, arriving some 21% below what analysts had expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts 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 forecasts to see what analysts are expecting for next year.

View our latest analysis for Chow Tai Fook Jewellery Group

Taking into account the latest results, Chow Tai Fook Jewellery Group's twelve analysts currently expect revenues in 2020 to be HK$66.3b, approximately in line with the last 12 months. Earnings per share are expected to grow 12% to HK$0.47. Yet prior to the latest earnings, analysts had been forecasting revenues of HK$68.6b and earnings per share (EPS) of HK$0.45 in 2020. So it's pretty clear that while sentiment around revenues has declined following the latest results, analysts are now more bullish on the company's earnings power.

The consensus has made no major changes to the price target of HK$7.92, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. 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. The most optimistic Chow Tai Fook Jewellery Group analyst has a price target of HK$10.00 per share, while the most pessimistic values it at HK$5.40. 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.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Chow Tai Fook Jewellery Group's past performance and to peers in the same market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.4% a significant reduction from annual growth of 0.5% 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 9.5% annually for the foreseeable future. It's pretty clear that Chow Tai Fook Jewellery Group's revenues are expected to perform substantially worse than the wider market.

The Bottom Line

The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Chow Tai Fook Jewellery Group following these results. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings per share are more important to the intrinsic value of the business. 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Chow Tai Fook Jewellery Group analysts - going out to 2023, and you can see them free on our platform here.

You can also view our analysis of Chow Tai Fook Jewellery Group's balance sheet, and whether we think Chow Tai Fook Jewellery Group is carrying too much debt, for free on our platform here.

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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