Stock Analysis

Beshom Holdings Berhad (KLSE:BESHOM) Analysts Just Cut Their EPS Forecasts Substantially

KLSE:BESHOM
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One thing we could say about the analysts on Beshom Holdings Berhad (KLSE:BESHOM) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After the downgrade, the three analysts covering Beshom Holdings Berhad are now predicting revenues of RM241m in 2023. If met, this would reflect a decent 16% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 22% to RM0.11. Prior to this update, the analysts had been forecasting revenues of RM281m and earnings per share (EPS) of RM0.13 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.

View our latest analysis for Beshom Holdings Berhad

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KLSE:BESHOM Earnings and Revenue Growth October 2nd 2022

It'll come as no surprise then, to learn that the analysts have cut their price target 13% to RM1.57. 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. The most optimistic Beshom Holdings Berhad analyst has a price target of RM1.66 per share, while the most pessimistic values it at RM1.46. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Beshom Holdings Berhad's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Beshom Holdings Berhad is forecast to grow faster in the future than it has in the past, with revenues expected to display 16% annualised growth until the end of 2023. If achieved, this would be a much better result than the 17% annual decline 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 revenue grow 22% per year. Although Beshom Holdings Berhad's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader 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 Beshom Holdings Berhad. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Beshom Holdings Berhad's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Beshom Holdings Berhad.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Beshom Holdings Berhad analysts - going out to 2025, and you can see them free on our platform here.

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Valuation is complex, but we're helping make it simple.

Find out whether Beshom Holdings Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.