Downgrade: Here's How Analysts See Sahara International Petrochemical Company (TADAWUL:2310) Performing In The Near Term

Today is shaping up negative for Sahara International Petrochemical Company (TADAWUL:2310) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. Investors however, have been notably more optimistic about Sahara International Petrochemical recently, with the stock price up an impressive 17% to ر.س49.85 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

Following the downgrade, the consensus from six analysts covering Sahara International Petrochemical is for revenues of ر.س7.7b in 2022, implying a painful 23% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to crater 36% to ر.س3.14 in the same period. Previously, the analysts had been modelling revenues of ر.س8.7b and earnings per share (EPS) of ر.س3.60 in 2022. Indeed, we can see that the analysts are a lot more bearish about Sahara International Petrochemical's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Sahara International Petrochemical

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 23% by the end of 2022. This indicates a significant reduction from annual growth of 16% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 2.0% annually for the foreseeable future. So it's pretty clear that Sahara International Petrochemical's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Sahara International Petrochemical. Unfortunately they also cut their revenue estimates for this year, and they expect sales to lag the wider market. That said, earnings per share are more important for creating value for shareholders. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Sahara International Petrochemical, and we wouldn't blame shareholders for feeling a little more cautious themselves.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Sahara International Petrochemical analysts - going out to 2024, and you can see them free on our platform here.

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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.