Genting Plantations Berhad Just Missed Earnings - But Analysts Have Updated Their Models
Genting Plantations Berhad (KLSE:GENP) missed earnings with its latest annual results, disappointing overly-optimistic forecasters. Genting Plantations Berhad missed earnings this time around, with RM3.2b revenue coming in 4.0% below what the analysts had modelled. Statutory earnings per share (EPS) of RM0.53 also fell short of expectations by 12%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Genting Plantations Berhad
After the latest results, the consensus from Genting Plantations Berhad's 15 analysts is for revenues of RM2.88b in 2023, which would reflect a chunky 9.8% decline in sales compared to the last year of performance. Statutory per share are forecast to be RM0.53, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of RM2.94b and earnings per share (EPS) of RM0.41 in 2023. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the considerable lift to to the earnings per share numbers.
The consensus has made no major changes to the price target of RM6.41, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Genting Plantations Berhad at RM8.00 per share, while the most bearish prices it at RM5.40. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Genting Plantations Berhad shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 9.8% by the end of 2023. This indicates a significant reduction from annual growth of 13% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 0.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Genting Plantations Berhad is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Genting Plantations Berhad's earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. 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. The consensus price target held steady at RM6.41, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Genting Plantations Berhad going out to 2025, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Genting Plantations Berhad (of which 1 shouldn't be ignored!) you should know about.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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