S P Setia Berhad (KLSE:SPSETIA) Released Earnings Last Week And Analysts Lifted Their Price Target To RM1.12

Shareholders of S P Setia Berhad (KLSE:SPSETIA) will be pleased this week, given that the stock price is up 11% to RM1.47 following its latest yearly results. Revenues came in 2.5% below expectations, at RM4.4b. Statutory earnings per share were relatively better off, with a per-share profit of RM0.048 being roughly in line with analyst estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on S P Setia Berhad after the latest results.

View our latest analysis for S P Setia Berhad

Taking into account the latest results, the most recent consensus for S P Setia Berhad from 13 analysts is for revenues of RM4.56b in 2024. If met, it would imply an okay 4.4% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 71% to RM0.076. Yet prior to the latest earnings, the analysts had been anticipated revenues of RM4.73b and earnings per share (EPS) of RM0.083 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

What's most unexpected is that the consensus price target rose 8.4% to RM1.12, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on S P Setia Berhad, with the most bullish analyst valuing it at RM1.81 and the most bearish at RM0.46 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of S P Setia Berhad'shistorical trends, as the 4.4% annualised revenue growth to the end of 2024 is roughly in line with the 4.1% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 8.2% per year. So it's pretty clear that S P Setia Berhad is expected to grow slower than similar companies in the same industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for S P Setia Berhad. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple S P Setia Berhad analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - S P Setia Berhad has 2 warning signs we think you should be aware of.

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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.