Earnings Miss: Farm Fresh Berhad Missed EPS By 60% And Analysts Are Revising Their Forecasts

Farm Fresh Berhad (KLSE:FFB) shareholders are probably feeling a little disappointed, since its shares fell 4.8% to RM1.20 in the week after its latest quarterly results. Revenue of RM185m surpassed estimates by 3.2%, although statutory earnings per share missed badly, coming in 60% below expectations at RM0.0034 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Farm Fresh Berhad

Taking into account the latest results, the current consensus from Farm Fresh Berhad's ten analysts is for revenues of RM756.9m in 2024. This would reflect a solid 13% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 64% to RM0.036. Yet prior to the latest earnings, the analysts had been anticipated revenues of RM772.0m and earnings per share (EPS) of RM0.044 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

The consensus price target held steady at RM1.37, 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. There are some variant perceptions on Farm Fresh Berhad, with the most bullish analyst valuing it at RM1.80 and the most bearish at RM1.10 per share. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Farm Fresh Berhad's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 17% growth on an annualised basis. This is compared to a historical growth rate of 31% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.3% per year. So it's pretty clear that, while Farm Fresh Berhad's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Farm Fresh Berhad going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Farm Fresh Berhad has 1 warning sign we think you should be aware 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.