Analysts Just Shaved Their Paramount Corporation Berhad (KLSE:PARAMON) Forecasts Dramatically

Market forces rained on the parade of Paramount Corporation Berhad (KLSE:PARAMON) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the downgrade, the current consensus from Paramount Corporation Berhad's twin analysts is for revenues of RM975m in 2023 which - if met - would reflect a reasonable 4.1% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to shrink 8.7% to RM0.096 in the same period. Before this latest update, the analysts had been forecasting revenues of RM1.1b and earnings per share (EPS) of RM0.12 in 2023. Indeed, we can see that the analysts are a lot more bearish about Paramount Corporation Berhad's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Paramount Corporation Berhad

Analysts made no major changes to their price target of RM0.89, suggesting the downgrades are not expected to have a long-term impact on Paramount Corporation Berhad'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 Paramount Corporation Berhad at RM0.94 per share, while the most bearish prices it at RM0.84. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Paramount Corporation Berhad is an easy business to forecast or the underlying assumptions are obvious.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Paramount Corporation Berhad's growth to accelerate, with the forecast 4.1% annualised growth to the end of 2023 ranking favourably alongside historical growth of 1.8% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Paramount Corporation Berhad to grow faster 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 Paramount Corporation Berhad. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Paramount Corporation Berhad.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2025, 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 downgrading 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. 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.