The investors in R.A.K. Ceramics P.J.S.C.'s (ADX:RAKCEC) will be rubbing their hands together with glee today, after the share price leapt 24% to د.إ2.85 in the week following its second-quarter results. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from R.A.K. Ceramics P.J.S.C's two analysts is for revenues of د.إ2.84b in 2021, which would reflect an okay 2.6% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 6,288% to د.إ0.30. In the lead-up to this report, the analysts had been modelling revenues of د.إ2.64b and earnings per share (EPS) of د.إ0.18 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a considerable lift to earnings per share in particular.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 19% to د.إ2.72per share.
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. One thing stands out from these estimates, which is that R.A.K. Ceramics P.J.S.C is forecast to grow faster in the future than it has in the past, with revenues expected to display 5.2% annualised growth until the end of 2021. If achieved, this would be a much better result than the 3.6% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.7% annually for the foreseeable future. Although R.A.K. Ceramics P.J.S.C's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader 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 R.A.K. Ceramics P.J.S.C following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for R.A.K. Ceramics P.J.S.C going out as far as 2023, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 5 warning signs for R.A.K. Ceramics P.J.S.C that you should be aware of.
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