Stock Analysis

Sarawak Oil Palms Berhad Just Beat Revenue Estimates By 26%

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Sarawak Oil Palms Berhad (KLSE:SOP) just released its latest yearly results and things are looking bullish. Revenue of RM5.1b beat expectations by 26% and statutory earnings per share (EPS) of RM0.34 exceeded forecasts by 16%. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Sarawak Oil Palms Berhad

KLSE:SOP Earnings and Revenue Growth March 3rd 2024

After the latest results, the consensus from Sarawak Oil Palms Berhad's four analysts is for revenues of RM4.61b in 2024, which would reflect a not inconsiderable 10% decline in revenue compared to the last year of performance. Statutory earnings per share are predicted to increase 8.5% to RM0.37. Before this earnings report, the analysts had been forecasting revenues of RM3.96b and earnings per share (EPS) of RM0.33 in 2024. There has definitely been an improvement in perception after these results, with the analysts noticeably increasing both their earnings and revenue estimates.

Despite these upgrades,the analysts have not made any major changes to their price target of RM3.03, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. The most optimistic Sarawak Oil Palms Berhad analyst has a price target of RM3.20 per share, while the most pessimistic values it at RM2.74. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 10% by the end of 2024. This indicates a significant reduction from annual growth of 14% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.8% per year. It's pretty clear that Sarawak Oil Palms Berhad's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Sarawak Oil Palms Berhad's earnings potential next year. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Sarawak Oil Palms Berhad going out to 2026, and you can see them free on our platform here.

Even so, be aware that Sarawak Oil Palms Berhad is showing 3 warning signs in our investment analysis , and 1 of those is concerning...

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Find out whether Sarawak Oil Palms Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.