Is ZKH's Q1 2025 EPS forecast too conservative?

**ZKH's Q1 2025 EPS forecast appears to be cautiously optimistic.** Here's why: 1. **Historical Performance Context**: ZKH's historical EPS performance has shown volatility. For instance, in Q1 2024, the company reported an EPS of -$0.04, which was better than the estimated -$0.06 but reflected a loss. This suggests that ZKH's financial performance can fluctuate significantly from period to period. |code|Ticker|Name|Date|Diluted EPS YoY|Diluted EPS|market_code| |---|---|---|---|---|---|---| |ZKH|ZKH.N|ZKH Group|2023 Q2||-0.0565415871|169| |ZKH|ZKH.N|ZKH Group|2023 Q3||-0.02055921|169| |ZKH|ZKH.N|ZKH Group|2023 Q4|75.71374295390663|-0.0042254115|169| |ZKH|ZKH.N|ZKH Group|2024 Q1|84.14747355653583|-0.002769968|169| 2. **Recent Financial Trends**: ZKH has been working on improving its financial metrics. The company reported a significant improvement in its gross margin, which increased to 17.2% for the full year 2024, up from 16.7% in 2023. This indicates a positive trend that could potentially lead to better EPS figures. 3. **Market Expectations and Analyst Ratings**: Analysts have set the Q1 2025 EPS forecast at -$0.01, which is a substantial improvement from the previous quarter's EPS of -$0.04. This suggests that analysts are cautiously optimistic about ZKH's prospects, anticipating a reduction in losses rather than a profit. 4. **Operational and Strategic Initiatives**: ZKH has been actively pursuing strategic initiatives, such as entering a comprehensive strategic partnership with Tmall. These partnerships could potentially boost revenue and profitability in the future. 5. **Cash Flow Improvements**: The company has achieved positive operating cash flow for the first time, indicating improved operational efficiency. This is a positive sign that could support the company's financial stability and potential growth. In conclusion, while ZKH's Q1 2025 EPS forecast is not overly aggressive given the company's recent performance and strategic initiatives, it also reflects the ongoing challenges and uncertainties in the market. A cautiously optimistic outlook is appropriate, considering both the potential for improvement and the risks that remain.