Forecast: Analysts Think MBM Resources Berhad's (KLSE:MBMR) Business Prospects Have Improved Drastically

Celebrations may be in order for MBM Resources Berhad (KLSE:MBMR) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 10% to RM3.90 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the latest upgrade, MBM Resources Berhad's eight analysts currently expect revenues in 2023 to be RM2.3b, approximately in line with the last 12 months. Statutory earnings per share are supposed to reduce 7.7% to RM0.63 in the same period. Previously, the analysts had been modelling revenues of RM2.0b and earnings per share (EPS) of RM0.56 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for MBM Resources Berhad

Despite these upgrades, the analysts have not made any major changes to their price target of RM4.41, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic MBM Resources Berhad analyst has a price target of RM5.22 per share, while the most pessimistic values it at RM3.17. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 0.3% by the end of 2023. This indicates a significant reduction from annual growth of 0.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 14% per year. It's pretty clear that MBM Resources Berhad's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at MBM Resources Berhad.

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 MBM Resources Berhad analysts - going out to 2025, 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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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.