Analysts Just Made A Sizeable Upgrade To Their Saudi Industrial Investment Group (TADAWUL:2250) Forecasts

Saudi Industrial Investment Group (TADAWUL:2250) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After the upgrade, the four analysts covering Saudi Industrial Investment Group are now predicting revenues of ر.س9.1b in 2021. If met, this would reflect a substantial 36% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 136% to ر.س3.00. Previously, the analysts had been modelling revenues of ر.س7.8b and earnings per share (EPS) of ر.س1.99 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for Saudi Industrial Investment Group

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of ر.س40.03, suggesting that the forecast performance does not have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Saudi Industrial Investment Group, with the most bullish analyst valuing it at ر.س44.00 and the most bearish at ر.س38.00 per share. This is a very narrow spread of estimates, implying either that Saudi Industrial Investment Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. It's clear from the latest estimates that Saudi Industrial Investment Group's rate of growth is expected to accelerate meaningfully, with the forecast 85% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 1.2% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Saudi Industrial Investment Group to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Saudi Industrial Investment Group could be a good candidate for more research.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Saudi Industrial Investment Group that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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