Results: AEON Credit Service (M) Berhad Beat Earnings Expectations And Analysts Now Have New Forecasts

Last week saw the newest third-quarter earnings release from AEON Credit Service (M) Berhad (KLSE:AEONCR), an important milestone in the company's journey to build a stronger business. It looks like a credible result overall - although revenues of RM1.6b were what the analysts expected, AEON Credit Service (M) Berhad surprised by delivering a (statutory) profit of RM0.88 per share, an impressive 29% above what was forecast. 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 AEON Credit Service (M) Berhad

Following the latest results, AEON Credit Service (M) Berhad's five analysts are now forecasting revenues of RM1.79b in 2023. This would be a sizeable 65% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 2.1% to RM1.78. In the lead-up to this report, the analysts had been modelling revenues of RM1.67b and earnings per share (EPS) of RM1.50 in 2023. So it seems there's been a definite increase in optimism about AEON Credit Service (M) Berhad's future following the latest results, with a decent improvement in the earnings per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of RM16.19, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. There are some variant perceptions on AEON Credit Service (M) Berhad, with the most bullish analyst valuing it at RM18.80 and the most bearish at RM14.50 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting AEON Credit Service (M) Berhad is an easy business to forecast or the the analysts are all using similar assumptions.

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. The analysts are definitely expecting AEON Credit Service (M) Berhad's growth to accelerate, with the forecast 49% annualised growth to the end of 2023 ranking favourably alongside historical growth of 3.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 20% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that AEON Credit Service (M) Berhad is expected to grow much faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards AEON Credit Service (M) Berhad following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is 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 forecasts for AEON Credit Service (M) Berhad going out to 2025, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for AEON Credit Service (M) Berhad (1 makes us a bit uncomfortable!) that you need to be mindful of.

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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.