Analysts' Revenue Estimates For Kelington Group Berhad (KLSE:KGB) Are Surging Higher

Celebrations may be in order for Kelington Group Berhad (KLSE:KGB) 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 Kelington Group Berhad will make substantially more sales than they'd previously expected.

After the upgrade, the six analysts covering Kelington Group Berhad are now predicting revenues of RM1.1b in 2022. If met, this would reflect a credible 5.1% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to be RM0.072, approximately in line with the last 12 months. Previously, the analysts had been modelling revenues of RM955m and earnings per share (EPS) of RM0.069 in 2022. Sentiment certainly seems to have improved in recent times, with a decent improvement in revenue and a small lift in earnings per share estimates.

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Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of RM1.71, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Kelington Group Berhad analyst has a price target of RM1.88 per share, while the most pessimistic values it at RM1.24. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Kelington Group Berhad's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 5.1% growth on an annualised basis. This is compared to a historical growth rate of 19% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Kelington Group Berhad.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Kelington Group Berhad.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Kelington Group Berhad analysts - going out to 2024, and you can see them 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.