Top Glove Corporation Bhd. (KLSE:TOPGLOV) Just Reported And Analysts Have Been Cutting Their Estimates

The quarterly results for Top Glove Corporation Bhd. (KLSE:TOPGLOV) were released last week, making it a good time to revisit its performance. It wasn't the greatest result, with ongoing losses and revenues of RM550m falling short of analyst predictions. The losses were a relative bright spot though, with a per-share statutory loss of RM0.0064 being moderately smaller than the analysts forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Top Glove Corporation Bhd

Taking into account the latest results, the consensus forecast from Top Glove Corporation Bhd's 19 analysts is for revenues of RM2.86b in 2024. This reflects a substantial 39% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 83% to RM0.015. Yet prior to the latest earnings, the analysts had been forecasting revenues of RM3.16b and losses of RM0.0064 per share in 2024. So it's pretty clear the analysts have mixed opinions on Top Glove Corporation Bhd after this update; revenues were downgraded and per-share losses expected to increase.

The average price target was broadly unchanged at RM0.80, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Top Glove Corporation Bhd, with the most bullish analyst valuing it at RM1.10 and the most bearish at RM0.50 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Top Glove Corporation Bhd's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Top Glove Corporation Bhd is forecast to grow faster in the future than it has in the past, with revenues expected to display 94% annualised growth until the end of 2024. If achieved, this would be a much better result than the 9.6% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 15% annually. Not only are Top Glove Corporation Bhd's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Top Glove Corporation Bhd. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Top Glove Corporation Bhd analysts - going out to 2026, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.