One thing we could say about the covering analyst on ARB IOT Group Limited (NASDAQ:ARBB) – they aren’t optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the latest downgrade, the current consensus, from the sole analyst covering ARB IOT Group, is for revenues of RM200m in 2024, which would reflect a chunky 17% reduction in ARB IOT Group’s sales over the past 12 months. Statutory earnings per share are supposed to crater 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. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a pretty serious decline to earnings per share numbers as well.
It’ll come as no surprise then, to learn that the analyst has cut their price target 63% to US$3.00.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ARB IOT Group’s past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 17% annualised revenue decline to the end of 2024. That is a notable change from historical 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 9.5% annually for the foreseeable future. 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 most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from the analyst, we’d understand if readers now felt a bit wary of ARB IOT Group.
That said, this analyst might have good reason to be negative on ARB IOT Group, given its declining profit margins. Learn more, and discover the 3 other flags we’ve identified, for free on our platform here.
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.
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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.