Revenue Downgrade: Here's What Analysts Forecast For Cahya Mata Sarawak Berhad (KLSE:CMSB)

One thing we could say about the analysts on Cahya Mata Sarawak Berhad (KLSE:CMSB) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the current consensus from Cahya Mata Sarawak Berhad's seven analysts is for revenues of RM981m in 2021 which - if met - would reflect a sizeable 26% increase on its sales over the past 12 months. Statutory earnings per share are presumed to soar 210% to RM0.16. Previously, the analysts had been modelling revenues of RM1.1b and earnings per share (EPS) of RM0.17 in 2021. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a small dip in earnings per share numbers as well.

See our latest analysis for Cahya Mata Sarawak Berhad

The consensus price target fell 11% to RM1.98, with the weaker earnings outlook clearly leading analyst valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Cahya Mata Sarawak Berhad at RM2.43 per share, while the most bearish prices it at RM1.40. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Cahya Mata Sarawak Berhad's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 26% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 12% a year 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 9.1% annually. Not only are Cahya Mata Sarawak Berhad'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 take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Cahya Mata Sarawak Berhad going forwards.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Cahya Mata Sarawak Berhad analysts - going out to 2023, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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