Bearish: Analysts Just Cut Their BRC Asia Limited (SGX:BEC) Revenue and EPS estimates

The analysts covering BRC Asia Limited (SGX:BEC) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the four analysts covering BRC Asia, is for revenues of S$1.5b in 2023, which would reflect a considerable 9.2% reduction in BRC Asia's sales over the past 12 months. Statutory earnings per share are supposed to descend 15% to S$0.24 in the same period. Before this latest update, the analysts had been forecasting revenues of S$1.7b and earnings per share (EPS) of S$0.27 in 2023. Indeed, we can see that the analysts are a lot more bearish about BRC Asia's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for BRC Asia

The consensus price target fell 8.1% to S$1.94, with the weaker earnings outlook clearly leading analyst valuation estimates. 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 BRC Asia analyst has a price target of S$2.20 per share, while the most pessimistic values it at S$1.66. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

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 sales are expected to reverse, with a forecast 9.2% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 24% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 8.6% annually for the foreseeable future. It's pretty clear that BRC Asia's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that BRC Asia's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

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 BRC Asia 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.