Revenue Beat: Saudi Arabian Oil Company Beat Analyst Estimates By 6.8%

The second-quarter results for Saudi Arabian Oil Company (TADAWUL:2222) were released last week, making it a good time to revisit its performance. Results overall were respectable, with statutory earnings of ر.س0.44 per share roughly in line with what the analysts had forecast. Revenues of ر.س471b came in 6.8% ahead of analyst predictions. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Saudi Arabian Oil

Following last week's earnings report, Saudi Arabian Oil's 13 analysts are forecasting 2024 revenues to be ر.س1.82t, approximately in line with the last 12 months. Per-share earnings are expected to accumulate 2.7% to ر.س1.85. In the lead-up to this report, the analysts had been modelling revenues of ر.س1.77t and earnings per share (EPS) of ر.س1.85 in 2024. There doesn't appear to have been a major change in sentiment following the results, other than the small lift in revenue estimates.

It may not be a surprise to see thatthe analysts have reconfirmed their price target of ر.س33.10, implying that the uplift in revenue is not expected to greatly contribute to Saudi Arabian Oil's valuation in the near term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Saudi Arabian Oil analyst has a price target of ر.س37.50 per share, while the most pessimistic values it at ر.س30.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.8% by the end of 2024. This indicates a significant reduction from annual growth of 15% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 2.7% per year. The forecasts do look bearish for Saudi Arabian Oil, since they're expecting it to shrink faster than the 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. They also upgraded their estimates, with revenue apparently performing well, although it is expected to lag the wider industry this year. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Saudi Arabian Oil. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Saudi Arabian Oil analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that Saudi Arabian Oil is showing 1 warning sign in our investment analysis , you should know about...

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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.