Celebrations may be in order for Rabigh Refining and Petrochemical Company (TADAWUL:2380) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.
After the upgrade, the dual analysts covering Rabigh Refining and Petrochemical are now predicting revenues of ر.س30b in 2021. If met, this would reflect a sizeable 35% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 87% to ر.س0.58. However, before this estimates update, the consensus had been expecting revenues of ر.س17b and ر.س0.88 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
The consensus price target rose 26% to ر.س11.05, with the analysts encouraged by the higher revenue and lower forecast losses for this year. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Rabigh Refining and Petrochemical at ر.س15.10 per share, while the most bearish prices it at ر.س7.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
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. The analysts are definitely expecting Rabigh Refining and Petrochemical's growth to accelerate, with the forecast 35% annualised growth to the end of 2021 ranking favourably alongside historical growth of 3.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Rabigh Refining and Petrochemical to grow faster than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Rabigh Refining and Petrochemical is moving incrementally towards profitability. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Rabigh Refining and Petrochemical.
Better yet, Rabigh Refining and Petrochemical is expected to break-even soon - within the next few years - according to analyst forecasts, which would be a momentous event for shareholders. For more information, you can click through to our free platform to learn more about these forecasts.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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