Forecast: Analysts Think Sarawak Oil Palms Berhad's (KLSE:SOP) Business Prospects Have Improved Drastically

Sarawak Oil Palms Berhad (KLSE:SOP) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After the upgrade, the consensus from Sarawak Oil Palms Berhad's four analysts is for revenues of RM5.0b in 2022, which would reflect a measurable 2.5% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to descend 18% to RM0.88 in the same period. Before this latest update, the analysts had been forecasting revenues of RM4.4b and earnings per share (EPS) of RM0.68 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

See our latest analysis for Sarawak Oil Palms Berhad

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. We would also point out that the forecast 2.5% annualised revenue decline to the end of 2022 is better than the historical trend, which saw revenues shrink 5.6% annually over the past five years By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue shrink 0.2% per year. While this is interesting, Sarawak Oil Palms Berhad's, revenues are still expected to shrink next year, and at a faster rate than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Notably, analysts also upgraded their revenue estimates, with sales performing well although Sarawak Oil Palms Berhad's revenue growth is expected to trail that of the wider market. The clear improvement in sentiment should be enough to get most shareholders feeling more optimistic about Sarawak Oil Palms Berhad's future.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Sarawak Oil Palms Berhad that suggests the company could be somewhat undervalued. For more information, you can click through to our platform to learn more about our valuation approach.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading 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.