The latest analyst coverage could presage a bad day for Food Empire Holdings Limited (SGX:F03), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, the current consensus, from the two analysts covering Food Empire Holdings, is for revenues of US$270m in 2020, which would reflect a noticeable 6.3% reduction in Food Empire Holdings' sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$301m in 2020. It looks like forecasts have become a fair bit less optimistic on Food Empire Holdings, given the measurable cut to revenue estimates.
The consensus price target fell 23% to S$0.69, with the analysts clearly less optimistic about Food Empire Holdings' valuation following this update. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Food Empire Holdings, with the most bullish analyst valuing it at S$0.75 and the most bearish at S$0.63 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
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. We would highlight that sales are expected to reverse, with the forecast 6.3% revenue decline a notable change from historical growth of 5.1% 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 7.5% annually for the foreseeable future. It's pretty clear that Food Empire Holdings' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Food Empire Holdings this year. They also expect company revenue to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Food Empire Holdings' future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Food Empire Holdings after today.
Hungry for more information? At least one of Food Empire Holdings' two analysts has provided estimates out to 2022, 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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