Revenue Miss: Kuala Lumpur Kepong Berhad Fell 14% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models

Last week saw the newest quarterly earnings release from Kuala Lumpur Kepong Berhad (KLSE:KLK), an important milestone in the company's journey to build a stronger business. Revenues were RM5.6b, 14% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of RM0.77 being in line with what the analysts anticipated. 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 Kuala Lumpur Kepong Berhad after the latest results.

See our latest analysis for Kuala Lumpur Kepong Berhad

Taking into account the latest results, the consensus forecast from Kuala Lumpur Kepong Berhad's 18 analysts is for revenues of RM24.8b in 2024. This reflects a decent 9.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 98% to RM1.13. Before this earnings report, the analysts had been forecasting revenues of RM24.9b and earnings per share (EPS) of RM1.34 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 RM23.38, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Kuala Lumpur Kepong Berhad at RM25.80 per share, while the most bearish prices it at RM19.70. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 13% growth on an annualised basis. That is in line with its 12% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 3.5% annually. So although Kuala Lumpur Kepong Berhad is expected to maintain its revenue growth rate, it's definitely 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 Kuala Lumpur Kepong Berhad. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at RM23.38, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Kuala Lumpur Kepong Berhad analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Kuala Lumpur Kepong Berhad has 3 warning signs (and 1 which doesn't sit too well with us) we think 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.