Earnings Miss: Farm Fresh Berhad Missed EPS By 22% And Analysts Are Revising Their Forecasts

Last week saw the newest second-quarter earnings release from Farm Fresh Berhad (KLSE:FFB), an important milestone in the company's journey to build a stronger business. Results overall were not great, with earnings of RM0.0068 per share falling drastically short of analyst expectations. Meanwhile revenues hit RM198m and were slightly better than forecasts. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Farm Fresh Berhad after the latest results.

Check out our latest analysis for Farm Fresh Berhad

Following the latest results, Farm Fresh Berhad's nine analysts are now forecasting revenues of RM786.6m in 2024. This would be a credible 4.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 44% to RM0.034. Yet prior to the latest earnings, the analysts had been anticipated revenues of RM778.4m and earnings per share (EPS) of RM0.035 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at RM1.52, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. Currently, the most bullish analyst values Farm Fresh Berhad at RM1.77 per share, while the most bearish prices it at RM1.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Farm Fresh Berhad shareholders.

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. We would highlight that Farm Fresh Berhad's revenue growth is expected to slow, with the forecast 8.1% annualised growth rate until the end of 2024 being well below the historical 21% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.7% per year. Even after the forecast slowdown in growth, it seems obvious that Farm Fresh Berhad is also expected 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 Farm Fresh 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. At Simply Wall St, we have a full range of analyst estimates for Farm Fresh Berhad going out to 2026, and you can see them free on our platform here..

Even so, be aware that Farm Fresh Berhad is showing 1 warning sign in our investment analysis , you should know about...

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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.