Downgrade: Here's How Analysts See Kawan Food Berhad (KLSE:KAWAN) Performing In The Near Term

Market forces rained on the parade of Kawan Food Berhad (KLSE:KAWAN) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

After this downgrade, Kawan Food Berhad's three analysts are now forecasting revenues of RM301m in 2023. This would be a credible 3.6% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to decrease 6.2% to RM0.085 in the same period. Before this latest update, the analysts had been forecasting revenues of RM336m and earnings per share (EPS) of RM0.12 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for Kawan Food Berhad

The consensus price target fell 21% to RM2.00, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. We would highlight that Kawan Food Berhad's revenue growth is expected to slow, with the forecast 3.6% annualised growth rate until the end of 2023 being well below the historical 9.0% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 1.1% annually. So it's pretty clear that, while Kawan Food Berhad's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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 Kawan Food Berhad. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Kawan Food Berhad.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Kawan Food Berhad analysts - going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.