Stock Analysis

7-Eleven Malaysia Holdings Berhad Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

KLSE:SEM
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7-Eleven Malaysia Holdings Berhad (KLSE:SEM) missed earnings with its latest full-year results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at RM2.5b, statutory earnings missed forecasts by an incredible 48%, coming in at just RM0.026 per share. 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.

View our latest analysis for 7-Eleven Malaysia Holdings Berhad

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KLSE:SEM Earnings and Revenue Growth March 1st 2021

Following the latest results, 7-Eleven Malaysia Holdings Berhad's five analysts are now forecasting revenues of RM3.06b in 2021. This would be a huge 21% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 77% to RM0.046. Before this earnings report, the analysts had been forecasting revenues of RM3.06b and earnings per share (EPS) of RM0.059 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

The consensus price target held steady at RM1.60, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. Currently, the most bullish analyst values 7-Eleven Malaysia Holdings Berhad at RM2.00 per share, while the most bearish prices it at RM1.30. 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.

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 7-Eleven Malaysia Holdings Berhad's rate of growth is expected to accelerate meaningfully, with the forecast 21% revenue growth noticeably faster than its historical growth of 4.4%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 10% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect 7-Eleven Malaysia Holdings Berhad to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for 7-Eleven Malaysia Holdings Berhad. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple 7-Eleven Malaysia Holdings Berhad analysts - going out to 2023, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for 7-Eleven Malaysia Holdings Berhad (1 is significant!) that you should be aware of.

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