Analysts made a financial statement on Keppel Corporation Limited’s annual report (SGX: BN4)



It’s been a sad week for Keppel Corporation Limited (SGX: BN4), which has seen its investment drop 11% to S $ 5.01 the week since the company released its annual results. Income was as expected at S $ 6.6 billion, while statutory losses climbed to S $ 0.28 per share. Profits are an important time for investors because they can follow a company’s performance, look at what analysts are forecasting for the next year, and see if there has been a change in sentiment towards the company. So we’ve put together the latest post-earnings forecast to see what the estimates suggest for next year.

See our latest analysis for Keppel

SGX: BN4 Profits and revenue growth January 31, 2021

Based on the latest results, the consensus forecast of the twelve Keppel analysts project revenues of S $ 7.00 billion in 2021, which would reflect an acceptable 6.4% improvement in sales from the past 12 months. Keppel is also expected to become profitable, with statutory earnings of S $ 0.39 per share. Before this report was written, analysts had modeled earnings of S $ 7.23 billion and earnings per share (EPS) of S $ 0.41 in 2021. It’s pretty clear that the pessimism surfaced afterwards. the latest results, resulting in lower earnings prospects and a slight downward revision to earnings per share estimates.

Analysts haven’t made any major changes to their S $ 5.94 price target, suggesting that the downgrades should not have a long-term impact on Keppel’s valuation. This is not the only conclusion we can draw from this data, however, as some investors also like to factor in the spread in estimates when evaluating analysts’ price targets. There are a few variations of perceptions on Keppel, with the most bullish analyst valuing it at S $ 7.00 and the most bearish at S $ 4.56 per share. There are certainly different opinions on the stock, but the range of estimates is not wide enough to imply that the situation is unpredictable, in our opinion.

One way to get more context on these forecasts is to look at how they stack up against both past performance and the performance of other companies in the same industry. For example, we noticed that Keppel’s growth rate is expected to accelerate significantly, with expected revenue growing 6.4%, well above its historic decline of 3.8% per year over the course of over the past five years. Compare that to analysts’ estimates for the industry as a whole, which suggest the industry’s revenue (overall) is expected to grow 8.5% next year. So while Keppel’s revenue growth is expected to improve, it is still expected to grow more slowly than the industry.

The bottom line

The most important thing to remember is that analysts have lowered their earnings per share estimates, showing that there has been a marked drop in sentiment following these results. Unfortunately, they’ve lowered their revenue estimates as well, and our data indicates that earnings should be worse than the industry as a whole. Even so, earnings per share are more important to the intrinsic value of the company. The consensus price target has not really changed, suggesting that the intrinsic value of the company has not undergone any major changes with the latest estimates.

Continuing this reflection, we believe that the long-term outlook of the company is much more relevant than the results of next year. We have a forecast for Keppel through 2023, and you can see it for free on our platform here.

Even so, know that Keppel shows 1 warning sign in our investment analysis , you must know…

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