Genting Berhad (KLSE:GENTING) Released Earnings Last Week And Analysts Lifted Their Price Target To RM4.96

Genting Berhad (KLSE:GENTING) just released its third-quarter report and things are looking bullish. The results were impressive, with revenues of RM3.3b exceeding analyst forecasts by 22%, and statutory losses of RM0.034 were likewise much smaller than the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Genting Berhad

Following the latest results, Genting Berhad's 14 analysts are now forecasting revenues of RM19.1b in 2021. This would be a huge 38% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Genting Berhad forecast to report a statutory profit of RM0.34 per share. In the lead-up to this report, the analysts had been modelling revenues of RM19.5b and earnings per share (EPS) of RM0.36 in 2021. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

What's most unexpected is that the consensus price target rose 7.9% to RM4.96, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. 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 Genting Berhad analyst has a price target of RM6.40 per share, while the most pessimistic values it at RM4.00. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Genting Berhad's rate of growth is expected to accelerate meaningfully, with the forecast 38% revenue growth noticeably faster than its historical growth of 0.8%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 29% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Genting Berhad is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Genting Berhad. They also downgraded their revenue estimates, although industry data suggests that Genting Berhad's revenues are 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.

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 Genting Berhad analysts - going out to 2022, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Genting Berhad (including 1 which is a bit unpleasant) .

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