Shareholders of PICC Property and Casualty Company Limited (HKG:2328) will be pleased this week, given that the stock price is up 10% to HK$7.50 following its latest annual results. It was a workmanlike result, with revenues of CN¥398b coming in 5.3% ahead of expectations, and statutory earnings per share of CN¥1.09, in line with analyst appraisals. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for PICC Property and Casualty

Following the latest results, PICC Property and Casualty's 19 analysts are now forecasting revenues of CN¥421.4b in 2020. This would be a reasonable 5.9% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to reduce 6.5% to CN¥1.02 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥418.9b and earnings per share (EPS) of CN¥1.08 in 2020. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥9.54, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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 PICC Property and Casualty analyst has a price target of CN¥11.73 per share, while the most pessimistic values it at CN¥6.86. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that PICC Property and Casualty's revenue growth will slow down substantially, with revenues next year expected to grow 5.9%, compared to a historical growth rate of 11% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 2.1% next year. So it's clear that despite the slowdown in growth, PICC Property and Casualty is still expected to grow meaningfully faster 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. Fortunately, they also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations. Their estimates also suggest that PICC Property and Casualty's revenues are expected to perform better 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for PICC Property and Casualty going out to 2023, and you can see them free on our platform here..

Even so, be aware that PICC Property and Casualty is showing 2 warning signs in our investment analysis , you should know about...

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