Inari Amertron Berhad Just Missed Earnings - But Analysts Have Updated Their Models

The analysts might have been a bit too bullish on Inari Amertron Berhad (KLSE:INARI), given that the company fell short of expectations when it released its second-quarter results last week. Results showed a clear earnings miss, with RM414m revenue coming in 5.6% lower than what the analystsexpected. Statutory earnings per share (EPS) of RM0.023 missed the mark badly, arriving some 33% below what was expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Inari Amertron Berhad after the latest results.

View our latest analysis for Inari Amertron Berhad

Taking into account the latest results, the consensus forecast from Inari Amertron Berhad's 17 analysts is for revenues of RM1.51b in 2024. This reflects a reasonable 4.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 9.0% to RM0.09. Yet prior to the latest earnings, the analysts had been anticipated revenues of RM1.51b and earnings per share (EPS) of RM0.094 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at RM3.54, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Inari Amertron Berhad analyst has a price target of RM4.30 per share, while the most pessimistic values it at RM2.75. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Inari Amertron Berhad shareholders.

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. It's clear from the latest estimates that Inari Amertron Berhad's rate of growth is expected to accelerate meaningfully, with the forecast 8.9% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.0% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 14% per year. So it's clear that despite the acceleration in growth, Inari Amertron Berhad is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Inari Amertron Berhad. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Inari Amertron Berhad's revenue is expected to perform worse than the wider industry. The consensus price target held steady at RM3.54, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for Inari Amertron Berhad going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Inari Amertron Berhad , and understanding it should be part of your investment process.

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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.