Analysts' Revenue Estimates For George Kent (Malaysia) Berhad (KLSE:GKENT) Are Surging Higher

George Kent (Malaysia) Berhad (KLSE:GKENT) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

Following the upgrade, the latest consensus from George Kent (Malaysia) Berhad's three analysts is for revenues of RM347m in 2022, which would reflect a major 26% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 42% to RM0.10. Previously, the analysts had been modelling revenues of RM314m and earnings per share (EPS) of RM0.092 in 2022. Sentiment certainly seems to have improved in recent times, with a substantial gain in revenue and a small lift in earnings per share estimates.

View our latest analysis for George Kent (Malaysia) Berhad

It will come as no surprise to learn that the analysts have increased their price target for George Kent (Malaysia) Berhad 16% to RM0.67 on the back of these upgrades. 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. The most optimistic George Kent (Malaysia) Berhad analyst has a price target of RM0.74 per share, while the most pessimistic values it at RM0.56. This is a very narrow spread of estimates, implying either that George Kent (Malaysia) Berhad is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. For example, we noticed that George Kent (Malaysia) Berhad's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 26% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 17% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 10% annually. Not only are George Kent (Malaysia) Berhad's revenues expected to improve, it seems that the analysts are also expecting it to grow faster 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at George Kent (Malaysia) Berhad.

Analysts are clearly in love with George Kent (Malaysia) Berhad at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as concerns around earnings quality. You can learn more, and discover the 2 other flags we've identified, 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. 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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