As you might know, P.I.E. Industrial Berhad (KLSE:PIE) just kicked off its latest annual results with some very strong numbers. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 14% higher than the analysts had forecast, at RM686m, while EPS were RM0.12 beating analyst models by 59%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from P.I.E. Industrial Berhad's two analysts is for revenues of RM912.5m in 2021, which would reflect a sizeable 33% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 35% to RM0.16. Yet prior to the latest earnings, the analysts had been anticipated revenues of RM890.0m and earnings per share (EPS) of RM0.14 in 2021. So it seems there's been a definite increase in optimism about P.I.E. Industrial Berhad's future following the latest results, with a decent improvement in the earnings per share forecasts in particular.
It will come as no surprise to learn that the analysts have increased their price target for P.I.E. Industrial Berhad 65% to RM3.71on the back of these upgrades.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that P.I.E. Industrial Berhad's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 33%, well above its historical decline of 0.6% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 29% next year. So while P.I.E. Industrial Berhad's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around P.I.E. Industrial Berhad's earnings potential next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on P.I.E. Industrial Berhad. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.
It is also worth noting that we have found 2 warning signs for P.I.E. Industrial Berhad (1 is a bit concerning!) that you need to take into consideration.
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