MBM Resources Berhad Just Beat EPS By 8.3%: Here's What Analysts Think Will Happen Next

The annual results for MBM Resources Berhad (KLSE:MBMR) were released last week, making it a good time to revisit its performance. MBM Resources Berhad reported RM1.8b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of RM0.40 beat expectations, being 8.3% higher than what the analysts expected. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for MBM Resources Berhad

Taking into account the latest results, the most recent consensus for MBM Resources Berhad from eight analysts is for revenues of RM2.00b in 2021 which, if met, would be a solid 11% increase on its sales over the past 12 months. Per-share earnings are expected to climb 19% to RM0.50. In the lead-up to this report, the analysts had been modelling revenues of RM1.97b and earnings per share (EPS) of RM0.46 in 2021. So the consensus seems to have become somewhat more optimistic on MBM Resources Berhad's earnings potential following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 6.5% to RM4.41. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on MBM Resources Berhad, with the most bullish analyst valuing it at RM5.70 and the most bearish at RM3.60 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. The analysts are definitely expecting MBM Resources Berhad's growth to accelerate, with the forecast 11% growth ranking favourably alongside historical growth of 2.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% next year. MBM Resources Berhad is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around MBM Resources Berhad's earnings potential next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 2023, and you can see them free on our platform here.

You still need to take note of risks, for example - MBM Resources Berhad has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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