Downgrade: Here's How Analysts See Saudi Tadawul Group Holding Company (TADAWUL:1111) Performing In The Near Term

One thing we could say about the analysts on Saudi Tadawul Group Holding Company (TADAWUL:1111) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the consensus from Saudi Tadawul Group Holding's five analysts is for revenues of ر.س1.0b in 2023, which would reflect a discernible 6.4% decline in sales compared to the last year of performance. Statutory earnings per share are expected to be ر.س3.51, roughly flat on the last 12 months. Previously, the analysts had been modelling revenues of ر.س1.1b and earnings per share (EPS) of ر.س4.78 in 2023. Indeed, we can see that the analysts are a lot more bearish about Saudi Tadawul Group Holding's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Saudi Tadawul Group Holding

Despite the cuts to forecast earnings, there was no real change to the ر.س164 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. The most optimistic Saudi Tadawul Group Holding analyst has a price target of ر.س207 per share, while the most pessimistic values it at ر.س124. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 6.4% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 11% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 12% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Saudi Tadawul Group Holding is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Saudi Tadawul Group Holding's revenues are expected to grow slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Saudi Tadawul Group Holding.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Saudi Tadawul Group Holding analysts - going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.