The analysts covering Suria Capital Holdings Berhad (KLSE:SURIA) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following this downgrade, Suria Capital Holdings Berhad's two analysts are forecasting 2023 revenues to be RM315m, approximately in line with the last 12 months. Statutory earnings per share are expected to be RM0.16, roughly flat on the last 12 months. Before this latest update, the analysts had been forecasting revenues of RM365m and earnings per share (EPS) of RM0.18 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.
The average price target climbed 20% to RM1.99 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues to the end of 2023. Historically, Suria Capital Holdings Berhad's sales have shrunk approximately 4.6% annually over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 11% per year. So it's pretty clear that, although revenues are improving, Suria Capital Holdings Berhad is still expected to grow slower than the industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Suria Capital Holdings Berhad's revenues are expected to grow slower than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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.