Arabian Drilling Company Just Missed Earnings - But Analysts Have Updated Their Models

It's been a mediocre week for Arabian Drilling Company (TADAWUL:2381) shareholders, with the stock dropping 11% to ر.س76.10 in the week since its latest second-quarter results. Revenue of ر.س862m surpassed estimates by 2.8%, although statutory earnings per share missed badly, coming in 85% below expectations at ر.س0.09 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Following last week's earnings report, Arabian Drilling's eleven analysts are forecasting 2025 revenues to be ر.س3.42b, approximately in line with the last 12 months. Statutory earnings per share are forecast to plummet 20% to ر.س2.13 in the same period. Before this earnings report, the analysts had been forecasting revenues of ر.س3.59b and earnings per share (EPS) of ر.س3.16 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.

See our latest analysis for Arabian Drilling

The consensus price target fell 5.9% to ر.س96.81, with the weaker earnings outlook clearly leading valuation estimates. 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.س118 per share, while the most bearish prices it at ر.س76.00. 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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.8% by the end of 2025. This indicates a significant reduction from annual growth of 12% 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 6.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Arabian Drilling is expected to lag 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Arabian Drilling. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Arabian Drilling analysts - going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Arabian Drilling (2 are a bit concerning!) that you need to take into consideration.

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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.