What Does The Future Hold For D & O Green Technologies Berhad (KLSE:D&O)? These Analysts Have Been Cutting Their Estimates

One thing we could say about the analysts on D & O Green Technologies Berhad (KLSE:D&O) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After this downgrade, D & O Green Technologies Berhad's five analysts are now forecasting revenues of RM1.1b in 2023. This would be a meaningful 13% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 353% to RM0.11. Previously, the analysts had been modelling revenues of RM1.2b and earnings per share (EPS) of RM0.12 in 2023. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a minor downgrade to earnings per share numbers as well.

Check out our latest analysis for D & O Green Technologies Berhad

It'll come as no surprise then, to learn that the analysts have cut their price target 12% to RM3.97. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on D & O Green Technologies Berhad, with the most bullish analyst valuing it at RM5.10 and the most bearish at RM2.68 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. We would highlight that D & O Green Technologies Berhad's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2023 being well below the historical 18% p.a. growth over the last five years. Compare this to the 21 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 14% per year. So it's pretty clear that, while D & O Green Technologies Berhad's revenue growth is expected to slow, it's expected to grow roughly in line with the 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 D & O Green Technologies Berhad. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of D & O Green Technologies Berhad going forwards.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with D & O Green Technologies Berhad's business, like its declining profit margins. For more information, you can click here to discover this and the 1 other warning sign we've identified.

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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.