Analysts Recommendations More Measured for China
Watch the video with Andrew Stotz or read Watching the Street: China below.
Consensus Recommendations: China
Analysts’ recommendations have begun looking more measured for China after a rough couple of years. Here you can see that analysts covering the Chinese market have moved from being very negative in 2013, 2014 and 2015 to being neutral in 2016 so far.
Learn more: How to Benefit from Our Watching the Street Charts
We look at the most positive recommendations and the top one is a company called Agro-Pastoral Group, a concern focused on pig breeding—everything from feed to processed meat products. The company’s main market is China but it exports to U.S. and Europe as well.
Among companies with the most negative recommendations, Sinopec Oilfield Service has a negative recommendation though analysts have begun to turn positive on polyester-related businesses.
Consensus Earnings Estimates: China
If we look at consensus earnings estimates for China, what we can see here is that earnings estimates have shown a downward trend over recent years. The same goes for EPS from 2013 to 2015.
Right now, we can see that the consensus earnings estimates for the year ahead are just up 7%. So analysts are less optimistic about Chinese growth.
Among companies with the highest consensus EPS growth estimates, IDC Fluid Control has the top position, which produces valves and fittings used to control water in, for example, water supply and fire prevention, plumbing and water treatment.
Among companies with the lowest consensus EPS growth estimates, Sinopec Oilfield has the lowest EPS growth estimates, as well as the most negative recommendations.
Our research tends to show that if a company is that negatively perceived, eventually it will bounce back.
Consensus Target Prices: China
For the consensus target price expected return versus the actual return, we can see that the expected upside is about 15% for the 12 months going forward. Analysts weren’t optimistic in 2014 when the market returned almost 80%. So this measure isn’t much of a market predictor.
Still target price estimates appeared off in the first half of 2015 as well, but after the crash that began in June 2015, the year ended down 22%.
Hexing Packaging Printing has the highest estimated upside. It makes boxes and other packaging materials for various industries such as electronics, home appliances and food.
And then you can see that Sanfo Outdoor Products has the lowest expected return for consensus target prices.
Do YOU use any kind of analyst estimate when considering an investment?
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