Malayan Flour Mills Berhad Just Missed Earnings - But Analysts Have Updated Their Models

Malayan Flour Mills Berhad (KLSE:MFLOUR) just released its latest yearly report and things are not looking great. The analyst look to have been far too optimistic in the lead-up to these results, with revenues of (RM2.7b) coming in 26% below what they had expected. Statutory earnings per share of RM0.0054 fell 40% short. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.

See our latest analysis for Malayan Flour Mills Berhad

Taking into account the latest results, the most recent consensus for Malayan Flour Mills Berhad from sole analyst is for revenues of RM3.53b in 2021 which, if met, would be a substantial 32% increase on its sales over the past 12 months. Statutory earnings per share are predicted to jump 812% to RM0.049. Yet prior to the latest earnings, the analyst had been anticipated revenues of RM4.02b and earnings per share (EPS) of RM0.056 in 2021. Indeed, we can see that the analyst is a lot more bearish about Malayan Flour Mills Berhad's prospects following the latest results, administering a real cut to revenue estimates and slashing their EPS estimates to boot.

The average price target climbed 71% to RM1.33despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Malayan Flour Mills Berhad's rate of growth is expected to accelerate meaningfully, with the forecast 32% revenue growth noticeably faster than its historical growth of 2.5%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Malayan Flour Mills Berhad to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.

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. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Malayan Flour Mills Berhad (at least 1 which is concerning) , and understanding these should be part of your investment process.

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This article by Simply Wall St is general in nature. 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.
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