These Analysts Just Made A Massive Downgrade To Their Supermax Corporation Berhad (KLSE:SUPERMX) EPS Forecasts

The latest analyst coverage could presage a bad day for Supermax Corporation Berhad (KLSE:SUPERMX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the latest downgrade, the current consensus, from the ten analysts covering Supermax Corporation Berhad, is for revenues of RM1.7b in 2023, which would reflect a painful 37% reduction in Supermax Corporation Berhad's sales over the past 12 months. Statutory earnings per share are supposed to dive 81% to RM0.051 in the same period. Before this latest update, the analysts had been forecasting revenues of RM2.3b and earnings per share (EPS) of RM0.075 in 2023. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Supermax Corporation Berhad

The consensus price target fell 14% to RM0.73, with the weaker earnings outlook clearly leading analyst valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Supermax Corporation Berhad analyst has a price target of RM1.15 per share, while the most pessimistic values it at RM0.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 37% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 36% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.2% annually for the foreseeable future. It's pretty clear that Supermax Corporation Berhad's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Supermax Corporation Berhad. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Supermax Corporation Berhad's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Supermax Corporation Berhad.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Supermax Corporation Berhad's business, like concerns around earnings quality. For more information, you can click here to discover this and the 2 other risks we've identified.

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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.