Analysts Are Updating Their Arabian Drilling Company (TADAWUL:2381) Estimates After Its Third-Quarter Results

The third-quarter results for Arabian Drilling Company (TADAWUL:2381) were released last week, making it a good time to revisit its performance. Results overall were respectable, with statutory earnings of ر.س6.85 per share roughly in line with what the analysts had forecast. Revenues of ر.س920m came in 4.6% ahead of analyst predictions. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Arabian Drilling

Following the latest results, Arabian Drilling's eight analysts are now forecasting revenues of ر.س4.09b in 2024. This would be a sizeable 26% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 50% to ر.س9.39. Yet prior to the latest earnings, the analysts had been anticipated revenues of ر.س4.10b and earnings per share (EPS) of ر.س9.73 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at ر.س176, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values Arabian Drilling at ر.س213 per share, while the most bearish prices it at ر.س152. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Arabian Drilling's rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 3.7% p.a. 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 Arabian Drilling to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Arabian Drilling. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Arabian Drilling going out to 2025, and you can see them free on our platform here.

Even so, be aware that Arabian Drilling is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

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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.