Nestlé (Malaysia) Berhad Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

Last week, you might have seen that Nestlé (Malaysia) Berhad (KLSE:NESTLE) released its quarterly result to the market. The early response was not positive, with shares down 3.7% to RM100 in the past week. Revenues were RM1.5b, 13% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of RM2.81 being in line with what the analysts anticipated. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Nestlé (Malaysia) Berhad

After the latest results, the twelve analysts covering Nestlé (Malaysia) Berhad are now predicting revenues of RM6.61b in 2024. If met, this would reflect a credible 2.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 3.7% to RM2.31. Yet prior to the latest earnings, the analysts had been anticipated revenues of RM6.88b and earnings per share (EPS) of RM2.61 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.

The consensus price target fell 8.3% to RM111, with the weaker earnings outlook clearly leading valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Nestlé (Malaysia) Berhad, with the most bullish analyst valuing it at RM129 and the most bearish at RM78.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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 can infer from the latest estimates that forecasts expect a continuation of Nestlé (Malaysia) Berhad'shistorical trends, as the 5.3% annualised revenue growth to the end of 2024 is roughly in line with the 6.1% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 3.6% per year. So it's pretty clear that Nestlé (Malaysia) Berhad is forecast to grow substantially faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Nestlé (Malaysia) Berhad. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Nestlé (Malaysia) Berhad's future valuation.

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 Nestlé (Malaysia) Berhad going out to 2026, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Nestlé (Malaysia) Berhad (1 is concerning) 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.