Stock Analysis

Results: ARB IOT Group Limited Exceeded Expectations And The Consensus Has Updated Its Estimates

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Shareholders in ARB IOT Group Limited (NASDAQ:ARBB) had a terrible week, as shares crashed 33% to US$0.87 in the week since its latest annual results. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at RM242m, statutory earnings beat expectations by a notable 213%, coming in at RM1.17 per share. Following the result, the analyst has updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.

Check out our latest analysis for ARB IOT Group

NasdaqCM:ARBB Earnings and Revenue Growth November 3rd 2023

Following the recent earnings report, the consensus from sole analyst covering ARB IOT Group is for revenues of RM199.9m in 2024. This implies an uneasy 17% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to dive 61% to RM0.38 in the same period. Yet prior to the latest earnings, the analyst had been anticipated revenues of RM328.6m and earnings per share (EPS) of RM0.81 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a large cut to revenue estimates and a large cut to earnings per share numbers as well.

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

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 17% by the end of 2024. This indicates a significant reduction from annual growth of 48% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.3% annually for the foreseeable future. It's pretty clear that ARB IOT Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

It is also worth noting that we have found 4 warning signs for ARB IOT Group (1 is potentially serious!) that you need to take into consideration.

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.