Sime Darby Berhad Just Beat EPS By 27%: Here's What Analysts Think Will Happen Next
Shareholders of Sime Darby Berhad (KLSE:SIME) will be pleased this week, given that the stock price is up 13% to RM2.60 following its latest full-year results. Revenues of RM69b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of RM0.26 an impressive 27% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, Sime Darby Berhad's 13 analysts are now forecasting revenues of RM71.2b in 2027. This would be an okay 2.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to sink 12% to RM0.23 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of RM72.1b and earnings per share (EPS) of RM0.21 in 2027. So the consensus seems to have become somewhat more optimistic on Sime Darby Berhad's earnings potential following these results.
See our latest analysis for Sime Darby Berhad
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 10% to RM2.64. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Sime Darby Berhad at RM3.33 per share, while the most bearish prices it at RM2.05. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. It's pretty clear that there is an expectation that Sime Darby Berhad's revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 2.5% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 9.9% per year. Factoring in the forecast slowdown in growth, it's pretty clear that Sime Darby Berhad is still expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Sime Darby Berhad following these results. On the plus side, they made no changes to their revenue estimates - and they expect it to perform better than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Sime Darby Berhad going out to 2029, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Sime Darby Berhad (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.
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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.