Results: Arabian Drilling Company Exceeded Expectations And The Consensus Has Updated Its Estimates

Last week, you might have seen that Arabian Drilling Company (TADAWUL:2381) released its annual result to the market. The early response was not positive, with shares down 5.1% to ر.س175 in the past week. It looks like a credible result overall - although revenues of ر.س3.5b were in line with what the analysts predicted, Arabian Drilling surprised by delivering a statutory profit of ر.س6.79 per share, a notable 10% above expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Arabian Drilling after the latest results.

View our latest analysis for Arabian Drilling

After the latest results, the eight analysts covering Arabian Drilling are now predicting revenues of ر.س3.96b in 2024. If met, this would reflect a decent 14% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 34% to ر.س9.11. Before this earnings report, the analysts had been forecasting revenues of ر.س4.12b and earnings per share (EPS) of ر.س9.11 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The consensus has reconfirmed its price target of ر.س179, showing that the analysts don't expect weaker revenue expectations next year to have a material impact on Arabian Drilling's market value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Arabian Drilling, with the most bullish analyst valuing it at ر.س209 and the most bearish at ر.س156 per share. This is a very narrow spread of estimates, implying either that Arabian Drilling is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Arabian Drilling's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 5.0% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.7% 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 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 downgraded Arabian Drilling's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Still, earnings are more important to the intrinsic value of the business. 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 estimates - from multiple Arabian Drilling analysts - going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Arabian Drilling 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.