News Flash: Analysts Just Made A Captivating Upgrade To Their United Malacca Berhad (KLSE:UMCCA) Forecasts

Shareholders in United Malacca Berhad (KLSE:UMCCA) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.

Following the latest upgrade, the current consensus, from the twin analysts covering United Malacca Berhad, is for revenues of RM346m in 2021, which would reflect a noticeable 3.4% reduction in United Malacca Berhad's sales over the past 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting RM0.13 in per-share earnings. Previously, the analysts had been modelling revenues of RM313m and earnings per share (EPS) of RM0.05 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for United Malacca Berhad

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of RM4.88, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values United Malacca Berhad at RM5.25 per share, while the most bearish prices it at RM4.51. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting United Malacca Berhad is an easy business to forecast or the underlying assumptions are obvious.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 3.4%, a significant reduction from annual growth of 6.1% 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 5.1% next year. It's pretty clear that United Malacca Berhad's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at United Malacca Berhad.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

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. 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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