The analysts might have been a bit too bullish on Saudi Arabian Mining Company (Ma’aden) (TADAWUL:1211), given that the company fell short of expectations when it released its quarterly results last week. Revenues missed expectations somewhat, coming in at ر.س4.0b and leading to a corresponding blowout in statutory losses. The loss per share was ر.س0.35, some 13% larger than the analysts forecast. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following last week’s earnings report, Saudi Arabian Mining Company (Ma’aden)’s seven analysts are forecasting 2020 revenues to be ر.س17.3b, approximately in line with the last 12 months. Per-share losses are predicted to creep up to ر.س0.99. Before this latest report, the consensus had been expecting revenues of ر.س16.9b and ر.س0.51 per share in losses. While this year’s revenue estimates increased, there was also a loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The consensus price target stayed unchanged at ر.س34.29, seeming to suggest that higher forecast losses are not expected to have a long term impact on the valuation. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Saudi Arabian Mining Company (Ma’aden) at ر.س48.50 per share, while the most bearish prices it at ر.س24.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Saudi Arabian Mining Company (Ma’aden)’s past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 1.7% revenue decline a notable change from historical growth of 12% 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 6.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Saudi Arabian Mining Company (Ma’aden) is expected to lag the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Saudi Arabian Mining Company (Ma’aden). They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at ر.س34.29, with the latest estimates not enough to have an impact on their price targets.
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. We have forecasts for Saudi Arabian Mining Company (Ma’aden) going out to 2023, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Saudi Arabian Mining Company (Ma’aden) (1 is a bit unpleasant!) that we have uncovered.
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