Some Able Global Berhad (KLSE:ABLEGLOB) Analysts Just Made A Major Cut To Next Year's Estimates

The latest analyst coverage could presage a bad day for Able Global Berhad (KLSE:ABLEGLOB), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the dual analysts covering Able Global Berhad are now predicting revenues of RM536m in 2022. If met, this would reflect a modest 7.1% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to rise 6.4% to RM0.14. Before this latest update, the analysts had been forecasting revenues of RM605m and earnings per share (EPS) of RM0.16 in 2022. Indeed, we can see that the analysts are a lot more bearish about Able Global Berhad's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Able Global Berhad

The consensus price target fell 5.8% to RM2.03, with the weaker earnings outlook clearly leading analyst valuation estimates. 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. There are some variant perceptions on Able Global Berhad, with the most bullish analyst valuing it at RM2.05 and the most bearish at RM2.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Able Global Berhad is an easy business to forecast or the underlying assumptions are obvious.

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. The analysts are definitely expecting Able Global Berhad's growth to accelerate, with the forecast 7.1% annualised growth to the end of 2022 ranking favourably alongside historical growth of 2.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 0.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Able Global Berhad is expected to grow much faster than its industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Able Global Berhad. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Able Global Berhad, including concerns around earnings quality. For more information, you can click here to discover this and the 1 other risk we've identified.

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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.