Yahoo Finance Top Glove Corporation Bhd. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
It's been a mediocre week for Top Glove Corporation Bhd. (KLSE:TOPGLOV) shareholders, with the stock dropping 14% to RM0.72 in the week since its latest quarterly results. Revenues fell badly short of expectations, with sales of RM633m missing analyst predictions by 50%. Unsurprisingly, the statutory profit the analysts had been forecasting evaporated, turning into a loss of RM0.021 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Top Glove Corporation Bhd
Following the recent earnings report, the consensus from 20 analysts covering Top Glove Corporation Bhd is for revenues of RM3.99b in 2023, implying a considerable 13% decline in sales compared to the last 12 months. The statutory loss per share is expected to greatly reduce in the near future, narrowing 42% to RM0.023. Before this earnings report, the analysts had been forecasting revenues of RM5.43b and earnings per share (EPS) of RM0.025 in 2023. So we can see that the consensus has become notably more bearish on Top Glove Corporation Bhd's outlook following these results, with a pretty serious reduction to next year's revenue estimates. Furthermore, they expect the business to be loss-making next year, compared to their previous calls for a profit.
There was no major change to the consensus price target of RM0.63, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Top Glove Corporation Bhd analyst has a price target of RM1.81 per share, while the most pessimistic values it at RM0.32. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 17% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 20% 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 15% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Top Glove Corporation Bhd is expected to lag the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Top Glove Corporation Bhd dropped from profits to a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 Top Glove Corporation Bhd analysts - going out to 2025, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Top Glove Corporation Bhd you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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