Here's What Analysts Are Forecasting For Sunway Construction Group Berhad (KLSE:SUNCON) Following Its Earnings Miss

The analysts might have been a bit too bullish on Sunway Construction Group Berhad (KLSE:SUNCON), given that the company fell short of expectations when it released its quarterly results last week. Earnings fell badly short of analyst estimates, with RM605m revenues missing by 18%, and statutory earnings per share (EPS) of RM0.025 falling short of forecasts by some -17%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Sunway Construction Group Berhad

Taking into account the latest results, the consensus forecast from Sunway Construction Group Berhad's 14 analysts is for revenues of RM3.16b in 2024. This reflects a decent 15% improvement in revenue compared to the last 12 months. Per-share earnings are expected to expand 20% to RM0.14. In the lead-up to this report, the analysts had been modelling revenues of RM3.17b and earnings per share (EPS) of RM0.14 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 9.7% to RM3.30. It looks as though they previously had some doubts over whether the business would live up to their expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Sunway Construction Group Berhad, with the most bullish analyst valuing it at RM3.91 and the most bearish at RM2.30 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Sunway Construction Group Berhad's rate of growth is expected to accelerate meaningfully, with the forecast 20% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 7.4% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.1% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sunway Construction Group Berhad to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Sunway Construction Group Berhad analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Sunway Construction Group Berhad (at least 1 which is significant) , and understanding them should be part of your investment process.

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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.