Stock Analysis

One ARB IOT Group Limited (NASDAQ:ARBB) Analyst Just Cut Their EPS Forecasts

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The latest analyst coverage could presage a bad day for ARB IOT Group Limited (NASDAQ:ARBB), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the latest downgrade, the sole analyst covering ARB IOT Group provided consensus estimates of RM200m revenue in 2024, which would reflect a definite 17% decline on its sales over the past 12 months. Statutory earnings per share are supposed to plummet 61% to RM0.38 in the same period. Prior to this update, the analyst had been forecasting revenues of RM329m and earnings per share (EPS) of RM0.81 in 2024. Indeed, we can see that the analyst is a lot more bearish about ARB IOT Group's prospects, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for ARB IOT Group

NasdaqCM:ARBB Earnings and Revenue Growth November 4th 2023

The consensus price target fell 63% to US$3.00, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 17% by the end of 2024. This indicates a significant reduction from annual growth of 48% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ARB IOT Group is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for ARB IOT Group. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that ARB IOT Group's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of ARB IOT Group.

That said, the covering analyst might have good reason to be negative on ARB IOT Group, given its declining profit margins. For more information, you can click here to discover this and the 3 other warning signs we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether ARB IOT Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.