Broker Revenue Forecasts For CB Industrial Product Holding Berhad (KLSE:CBIP) Are Surging Higher

Celebrations may be in order for CB Industrial Product Holding Berhad (KLSE:CBIP) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that CB Industrial Product Holding Berhad will make substantially more sales than they'd previously expected. CB Industrial Product Holding Berhad has also found favour with investors, with the stock up a noteworthy 12% to RM1.14 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the latest upgrade, the current consensus, from the four analysts covering CB Industrial Product Holding Berhad, is for revenues of RM433m in 2020, which would reflect an uncomfortable 20% reduction in CB Industrial Product Holding Berhad's sales over the past 12 months. Statutory earnings per share are supposed to plunge 25% to RM0.071 in the same period. Prior to this update, the analysts had been forecasting revenues of RM389m and earnings per share (EPS) of RM0.067 in 2020. The most recent forecasts are noticeably more optimistic, with a nice gain to revenue estimates and a lift to earnings per share as well.

View our latest analysis for CB Industrial Product Holding Berhad

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of RM0.92, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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. The most optimistic CB Industrial Product Holding Berhad analyst has a price target of RM1.05 per share, while the most pessimistic values it at RM0.87. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting CB Industrial Product Holding Berhad is an easy business to forecast or the underlying assumptions are obvious.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the CB Industrial Product Holding Berhad's past performance and to peers in the same industry. Over the past five years, revenues have declined around 4.9% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 20% decline in revenue next year. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 21% next year. So it's pretty clear that, while it does have declining revenues, the analysts also expect CB Industrial Product Holding Berhad to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at CB Industrial Product Holding Berhad.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for CB Industrial Product Holding Berhad going out to 2022, and you can see them free on our platform here..

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. 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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