The Almarai Company (TADAWUL:2280) Second-Quarter Results Are Out And Analysts Have Published New Forecasts

Investors in Almarai Company (TADAWUL:2280) had a good week, as its shares rose 3.4% to close at ر.س57.80 following the release of its second-quarter results. Results overall were respectable, with statutory earnings of ر.س2.05 per share roughly in line with what the analysts had forecast. Revenues of ر.س5.2b came in 2.7% 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Almarai after the latest results.

See our latest analysis for Almarai

Following the latest results, Almarai's 13 analysts are now forecasting revenues of ر.س20.9b in 2024. This would be a credible 2.9% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 4.9% to ر.س2.27. Yet prior to the latest earnings, the analysts had been anticipated revenues of ر.س20.7b and earnings per share (EPS) of ر.س2.36 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.س64.51, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Almarai at ر.س71.00 per share, while the most bearish prices it at ر.س58.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Almarai's revenue growth is expected to slow, with the forecast 5.8% annualised growth rate until the end of 2024 being well below the historical 8.3% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.0% annually. Factoring in the forecast slowdown in growth, it seems obvious that Almarai is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Almarai's revenue is expected to perform worse than the wider industry. The consensus price target held steady at ر.س64.51, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Almarai going out to 2026, and you can see them free on our platform here..

You still need to take note of risks, for example - Almarai has 1 warning sign we think you should be aware of.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com