The analysts might have been a bit too bullish on Banque Saudi Fransi (TADAWUL:1050), given that the company fell short of expectations when it released its full-year results last week. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (ر.س4.7b) coming in 33% below what they had expected. Statutory earnings per share of ر.س1.24 fell 31% short. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Banque Saudi Fransi from six analysts is for revenues of ر.س7.07b in 2021 which, if met, would be a major 50% increase on its sales over the past 12 months. Statutory earnings per share are predicted to jump 39% to ر.س2.28. Before this earnings report, the analysts had been forecasting revenues of ر.س7.17b and earnings per share (EPS) of ر.س2.29 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of ر.س28.67, showing that the business is executing well and in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Banque Saudi Fransi, with the most bullish analyst valuing it at ر.س37.00 and the most bearish at ر.س20.00 per share. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Banque Saudi Fransi's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 50%, well above its historical decline of 3.2% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 7.2% next year. Not only are Banque Saudi Fransi's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at ر.س28.67, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Banque Saudi Fransi. Long-term earnings power is much more important than next year's profits. We have forecasts for Banque Saudi Fransi going out to 2023, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Banque Saudi Fransi that you need to take into consideration.
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