Analysts Just Made A Significant Upgrade To Their Wah Seong Corporation Berhad (KLSE:WASEONG) Forecasts

Wah Seong Corporation Berhad (KLSE:WASEONG) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on Wah Seong Corporation Berhad too, with the stock up 12% to RM0.84 over the past week. Could this upgrade be enough to drive the stock even higher?

After the upgrade, the consensus from Wah Seong Corporation Berhad's four analysts is for revenues of RM2.5b in 2023, which would reflect a perceptible 5.5% decline in sales compared to the last year of performance. The losses are expected to disappear over the next year or so, with forecasts for a profit of RM0.11 per share this year. Previously, the analysts had been modelling revenues of RM2.2b and earnings per share (EPS) of RM0.095 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for Wah Seong Corporation Berhad

Despite these upgrades, the analysts have not made any major changes to their price target of RM0.96, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Wah Seong Corporation Berhad analyst has a price target of RM1.20 per share, while the most pessimistic values it at RM0.70. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2023 compared to the historical decline of 13% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.1% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Wah Seong Corporation Berhad to suffer worse than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Wah Seong Corporation Berhad could be a good candidate for more research.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Wah Seong Corporation Berhad going out to 2025, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.