Saudi Basic Industries Corporation Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Saudi Basic Industries Corporation (TADAWUL:2010) just released its latest quarterly results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 4.2% to hit ر.س56b. Saudi Basic Industries also reported a statutory profit of ر.س2.64, which was an impressive 38% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Saudi Basic Industries

Following last week's earnings report, Saudi Basic Industries' ten analysts are forecasting 2022 revenues to be ر.س206.2b, approximately in line with the last 12 months. Statutory earnings per share are predicted to rise 2.6% to ر.س8.54. Yet prior to the latest earnings, the analysts had been anticipated revenues of ر.س206.9b and earnings per share (EPS) of ر.س7.62 in 2022. Although the revenue estimates have not really changed, we can see there's been a nice increase in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

The consensus price target was unchanged at ر.س119, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Saudi Basic Industries analyst has a price target of ر.س150 per share, while the most pessimistic values it at ر.س90.00. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Saudi Basic Industries' past performance and to peers in the same industry. It's clear from the latest estimates that Saudi Basic Industries' rate of growth is expected to accelerate meaningfully, with the forecast 2.6% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 1.3% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 7.6% per year. It seems obvious that as part of the brighter growth outlook, Saudi Basic Industries is expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Saudi Basic Industries' earnings potential next year. On the plus side, they made no changes to their revenue estimates - and they expect sales to perform better 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Saudi Basic Industries going out to 2024, and you can see them free on our platform here..

Even so, be aware that Saudi Basic Industries is showing 1 warning sign in our investment analysis , 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.